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The Secular Stagnation as an Immanent Feature of Post-2008 Neoliberalism

Image courtesy of Koren Shadmi (What’s Behind a Rise in Ethnic Nationalism? Maybe the Economy - The New York Times, Oct 14, 2016)
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Introduction

Secular stagnation is a term proposed by Keynesian economist Alvin Hansen back in the 1930s to explain the USA dismal economic performance during this period. The period in which sluggish growth and output, and employment levels well below potential, coincide with a problematically low (even negative) real interest rates even in the face of the extraordinarily easy monetary policy. Later a similar phenomenon occurred in Japan. that's why it is often called called Japanification of the economy.  Secular stagnation returned to the USA in full force after the financial crisis of 2008 (so called The Long Recession), so this is the second time the USA society experience the same socio-economic phenomenon. 

Formally it can be defined as any stagnation that lasts substantially longer then the business cycle (and dominates the business cycle induced variations of economic activities), the suppression of economic performance for a long (aka secular) period. It also can be viewed as the crisis of demand, when demand became systemically weak (which under neoliberalism is ensured by redistribution of wealth up).

The global stagnation we are experiencing is the logical result of the dominance of neoliberalism and a sign of its crisis an a ideology. It is somewhat similar to the crisis of Bolshevik's ideology in the USSR in 60th when everybody realized that the existing society cannot fulfill the key promise of higher living standards. And that over centralization of economic life naturally leads to stagnation.  The analogy does not ends here, but this point is the most important.

Neoliberalism replaced over-centralization (with iron fist one party rule) with over-financialization (with iron fist rule of financial oligarchy), with generally the same result as for the economy ( In other words neoliberalism like bolshevism is equal to economic stagnation; extremes meet).  The end of cheap oil did not help iether. In a sense neoliberalism might be viewed as the elite reaction to the end of cheap oil, when it became clear that there are not enough cookies for everyone.

This growth in the financial sector's profits has not been an accident; it is the result of  engineered shift in the elite thinking, which changed government policies. The central question of politics is, in my view, "Who has a right to live and who does not".  In the answer to this question, neoliberal subscribes to Social Darwinism: ordinary citizens should be given much less rather than more social protection. Such  policies would have been impossible in 50th and 60th (A Short History of Neo-liberalism)

In 1945 or 1950, if you had seriously proposed any of the ideas and policies in today's standard neo-liberal toolkit, you would have been laughed off the stage at or sent off to the insane asylum. At least in the Western countries, at that time, everyone was a Keynesian, a social democrat or a social-Christian democrat or some shade of Marxist.

The idea that the market should be allowed to make major social and political decisions; the idea that the State should voluntarily reduce its role in the economy, or that corporations should be given total freedom, that trade unions should be curbed and citizens given much less rather than more social protection--such ideas were utterly foreign to the spirit of the time. Even if someone actually agreed with these ideas, he or she would have hesitated to take such a position in public and would have had a hard time finding an audience.

And this change in government polices was achieved in classic Bolsheviks coup d'état way, when yoiu first create the Party of "professional neoliberal revolutionaries". Who then push for this change and "occupy" strategic places like economics departments at the universities, privately funded think tanks, MSM, and then subvert one or both major parties.  The crisis of "New Deal Capitalism" helped, but without network of think tanks and rich donors, the triumph of neoliberalism in the USA would have been impossible:

...one explanation for this triumph of neo-liberalism and the economic, political, social and ecological disasters that go with it is that neo-liberals have bought and paid for their own vicious and regressive "Great Transformation". They have understood, as progressives have not, that ideas have consequences. Starting from a tiny embryo at the University of Chicago with the philosopher-economist Friedrich von Hayek and his students like Milton Friedman at its nucleus, the neo-liberals and their funders have created a huge international network of foundations, institutes, research centers, publications, scholars, writers and public relations hacks to develop, package and push their ideas and doctrine relentlessly.

Most economists are acutely aware of the increasing role in economic life of financial markets, institutions and operations and the pursuit of prifits via excotic instruments such as derivatives (all this constituted  financialization). This dominant feature of neoliberalism has huge the re-distributional implications, huge effects on the US economy, international dimensions and monetary system, depth and longevity of financial crises and unapt policy responses to them.

They have built this highly efficient ideological cadre because they understand what the Italian Marxist thinker Antonio Gramsci was talking about when he developed the concept of cultural hegemony. If you can occupy peoples' heads, their hearts and their hands will follow.

I do not have time to give you details here, but believe me, the ideological and promotional work of the right has been absolutely brilliant. They have spent hundreds of millions of dollars, but the result has been worth every penny to them because they have made neo-liberalism seem as if it were the natural and normal condition of humankind. No matter how many disasters of all kinds the neo-liberal system has visibly created, no matter what financial crises it may engender, no matter how many losers and outcasts it may create, it is still made to seem inevitable, like an act of God, the only possible economic and social order available to us.  

Neoliberalism naturally leads to secular stagnation due to redistribution of wealth up. which undermines purchasing power of the 99%, or more correctly 99.9 of the population. In the USA this topic became hotly debated theme in establishment circles after Summers speech in 2013.  Unfortunately it was suppressed in Presidential campaign of 2016. Please note that Sanders speaks about Wall Street shenanigans, but not about ideology of neoliberalism.  No candidates tried to address this problem of "self-colonization" of the USA, which is probably crucial to "making America great again" instead of continued slide into what is called "banana republic" coined by American writer O. Henry (William Sydney Porter 1862–1910). Here is how Wikipedia described the term:

Banana republic or banana state is a pejorative political science term for politically unstable countries in Latin America whose economies are largely dependent on exporting a limited-resource product, e.g. bananas. It typically has stratified social classes, including a large, impoverished working class and a ruling plutocracy of business, political, and military elites.[1] This politico-economic oligarchy controls the primary-sector productions to exploit the country's economy.[2]

... ... ...

In economics, a banana republic is a country operated as a commercial enterprise for private profit, effected by a collusion between the State and favoured monopolies, in which the profit derived from the private exploitation of public lands is private property, while the debts incurred thereby are a public responsibility.

This topic is of great importance to the US elite because the USA is the citadel of  neoliberalism. It also suggest that the natural way neoliberal economic system based on increasing of the level of inequality (redistribution of wealth up) should behave: after the initial economic boom (like in case of steroids use) caused by  financialization of economy (as well as dissolution of the USSR), helped by off-shoring of manufacturing, the destructive effects of this temporary boost come into foreground. Redistribution of wealth up increases inequality which after a certain delay starts to undercuts domestic demand. It also tilts the demand more toward conspicuous consumption (note the boom of luxury cars sales in the USA).  

But after  inequality reaches certain critical threshold  the economy faces extended period of low growth reflecting persistently weak private demand (purchasing power of lower 90% of population).  People who mostly have low level service economy jobs (aka MC-jobs) can't buy that much.  Earlier giants of American capitalism like Ford understood that, but Wall Street sharks do not and does not want.  They operate under principle "Après nous le déluge" ("After us, the deluge").

An economic cycle enters recession when total spending falls below expected by producers and they realize that production level is too high relative to demand. What we have under neoliberalism is Marx's crisis of overproduction on a new level. At this level it is intrinsically connected with the parasitic nature of complete financialization of the economy. The focus on monetary policy and the failure to enact fiscal policy options is the key structural defect of neoliberalism ideology and can't be changed unless neoliberal ideology is abandoned. Which probably will not happen unless another huge crisis hits the USA. That might not happen soon.  Bolshevism lasted more then 70 years. If we assume that the "age of neoliberalism" started at 1973 with Pinochet coup d'état in Chile, neoliberalism as a social system is just 43 years old (as of 2016). It still has some "time to live"(TTL) in zombies state due to the principle first formulated by Margaret Thatcher as TINA ("There Is No Alternative") -- the main competitor, bolshevism, was discredited by the collapse of the USSR and China leadership adoption of neoliberalism. While Soviet leadership simply abandoned the sinking ship and became Nouveau riche in a neoliberal society that followed, Chinese elite managed to preserved at least outer framework of the Marxist state and the political control of the Communist party (not clear for how long). But there was a neoliberal transformation of Chinese economy, initiated, paradoxically, by the Chinese Communist Party.

Currently, no other ideology, including old "New Deal" ideology can  compete with neoliberal ideology, although things started to change with Sanders campaign in the USA on  the left and Trump campaign on the right. Most of what we see as a negative reaction to neoliberalism in Europe generally falls into the domain of cultural nationalism.    

The 2008 financial crisis, while discrediting neoliberalism as an ideology (in the same way as WWII discredited Bolshevism), was clearly not enough for the abandonment of this ideology. Actually neoliberalism proved to be remarkably resilient after this crisis. Some researchers claim that it entered "zombie state" and became more bloodthirsty and ruthless.

There is also religious overtones of neoliberalism which increase its longevity (similar to Trotskyism, and neoliberalism can be called "Trotskyism for rich"). So, from a small, unpopular sect with virtually no influence, neo-liberalism has become the major world religion with its dogmatic doctrine, its priesthood, its law-giving institutions and perhaps most important of all, its hell for heathen and sinners who dare to contest the revealed truth.  Like in most cults adherents became more fanatical believers after the prophecy did not materialized. The USA elite tried partially alleviate this problem by resorting to military Keynesianism as a supplementary strategy. But while military budget was raised to unprecedented levels, it can't reverse the tendency. Persistent high output gap is now a feature of the US economy, not a transitory state.

But there is another factor in play here: combination of peak (aka "plato" ;-) oil and established correlation of  the speed of economic growth and prices on fossil fuels and first of all on oil. Oil provides more than a third of the energy we use on the planet every day, more than any other energy source (How High Oil Prices Will Permanently Cap Economic Growth - Bloomberg). It is dominant fuel for transport and in this role it is very difficult to replace. 

That means that a substantial increase of price of oil acts as a fundamental limiting factor for economic growth. And "end of cheap oil" simply means that any increase of supply of oil to support growing population on the planet and economic growth now requires higher prices. Which naturally undermine economic growth, unless massive injection of currency are instituted. that probably was the factor that prevented slide of the US economy into the recession in 2009-2012.  Such a Catch-22.

Growth dampening potential of over $100-a-barrel oil is now a well established factor. Unfortunately, the reverse is not true. Drop of oil price to below $50 as happened in late 2014 and first half of 2015 did not increase growth rate of the USA economy. It might simply prevented it from sliding it into another phase of Great Recession. Moreover when  economies activity drops, less oil is needed.  Enter permanent stagnation.

Also there is not much oil left that can be profitably extracted at prices below $80. So the current oil price slump is a temporary phenomenon, whether it was engineered, or is a mixture of factors including temporary overcapacity . Sooner or later oil prices should return to level "above $80", as only at this level of oil price capital expenditures in new production make sense. That des not mean that oil prices can't be suppressed for another year or even two, but as Herbert Stein aptly noted   "If something cannot go on forever, it will stop,"

 The alien spaceship landing

Imagine the alien spaceship landed somewhere in the world. There would be denial, disbelief, fear, and great uncertainty for the future. World leaders would struggle to make sense of the events. The landing would change everything.

The secular stagnation (aka "end of permanent growth") is a very similar event.  This also is the event that has potential to change everything, but it is much more prolonged in time and due to this less visible ("boiling frog effect").  Also this is not a single event, but a long sequence of related events that probably might last several decades (as Japan had shown) or even centuries. The current "Great Recession" might be just a prolog to those events. It is clearly incompatible with capitalism as a mode of production, although capitalism as a social system demonstrated over the years tremendous adaptability and it is too early to write it down completely.  Also no clear alternatives exists. 

A very slow recovery and the secular stagnation is characteristic of economies suffering from a balance-sheet recession (aka crisis of overproduction), as forcefully argued by Nomura’s Richard Koo and other economists. The key point is that private investment is down, not because of “policy uncertainty” or “increased regulation”, but because business-sector expectations about future profitability have become dramatically depressed — and rationally so — in a context characterized by heavy indebtedness (of both households and corporations). As businesses see the demand falls they scale down production which creates negative feedback look and depresses demand further. 

The key point is that private investment is down, not because of “policy uncertainty” or “increased regulation”, but because business-sector expectations about future profitability have become dramatically depressed — and rationally so — in a context characterized by heavy indebtedness (of both households and corporations). As businesses see the demand falls they scale down production which creates negative feedback look and depresses demand further.   

Five  hypothesis about the roots of secular stagnation

There are at least five different hypothesis about the roots of secular stagnation:

Summers’s remarks and articles were followed by an explosion of debate concerning “secular stagnation”—a term commonly associated with Alvin Hansen’s work from the 1930s to ’50s, and frequently employed in Monthly Review to explain developments in the advanced economies from the 1970s to the early 2000s.2 Secular stagnation can be defined as the tendency to long-term (or secular) stagnation in the private accumulation process of the capitalist economy, manifested in rising unemployment and excess capacity and a slowdown in overall economic growth. It is often referred to simply as “stagnation.” There are numerous theories of secular stagnation but most mainstream theories hearken back to Hansen, who was Keynes’s leading early follower in the United States, and who derived the idea from various suggestions in Keynes’s General Theory of Employment, Interest and Money (1936).

Responses to Summers have been all over the map, reflecting both the fact that the capitalist economy has been slowing down, and the role in denying it by many of those seeking to legitimate the system. Stanford economist John B. Taylor contributed a stalwart denial of secular stagnation in the Wall Street Journal. In contrast, Paul Krugman, who is closely aligned with Summers, endorsed secular stagnation on several occasions in the New York Times. Other notable economists such as Brad DeLong and Michael Spence soon weighed in with their own views.3

Three prominent economists have new books directly addressing the phenomena of secular stagnation.4 It has now been formally modelled by Brown University economists Gauti Eggertsson and Neil Mehrotra, while Thomas Piketty’s high-profile book bases its theoretical argument and policy recommendations on stagnation tendencies of capitalism. This explosion of interest in the Summers/Krugman version of stagnation has also resulted in a collection of articles and debate, edited by Coen Teulings and Richard Baldwin, entitled Secular Stagnation: Facts, Causes and Cures.5

Seven years after “The Great Financial Crisis” of 2007–2008, the recovery remains sluggish. It can be argued that the length and depth of the Great Financial Crisis is a rather ordinary cyclical crisis. However, the monetary and fiscal measures to combat it were extraordinary. This has resulted in a widespread sense that there will not be a return to “normal.” Summers/Krugman’s resurrection within the mainstream of Hansen’s concept of secular stagnation is an attempt to explain how extraordinary policy measures following the 2007–2008 crisis merely led to the stabilization of a lethargic, if not comatose, economy.

But what do these economists mean by secular stagnation? If stagnation is a reality, does their conception of it make current policy tools obsolete? And what is the relationship between the Summers/Krugman notion of secular stagnation and the monopoly-finance capital theory?

... ... ...

In “secular stagnation,” the term “secular” is intended to differentiate between the normal business cycle and long-term, chronic stagnation. A long-term slowdown in the economy over decades can be seen as superimposed on the regular business cycle, reflecting the trend rather than the cycle.

In the general language of economics, secular stagnation, or simply stagnation, thus implies that the long-run potential economic growth has fallen, constituting the first pillar of MISS. This has been most forcefully argued for by Robert Gordon, as well as Garry Kasparov and Peter Thiel.6 Their argument is that the cumulative growth effect of current (and future) technological changes will be far weaker than in the past. Moreover, demographic changes place limits on the development of “human capital.” The focus is on technology, which orthodox economics generally sees as a factor external to the economy and on the supply-side (i.e., in relation to cost). Gordon’s position is thus different than that of moderate Keynesians like Summers and Krugman, who focus on demand-side contradictions of the system.

In Gordon’s supply-side, technocratic view, there are forces at work that will limit the growth in productive input and the efficiency of these inputs. This pillar of MISS emphasizes that it is constraints on the aggregate supply-side of the economy that have diminished absolutely the long-run potential growth.

The second pillar of MISS, also a supply-side view, goes back at least to Joseph Schumpeter. To explain the massive slump of 1937, Schumpeter maintained there had emerged a growing anti-business climate. Moreover, he contended that the rise of the modern corporation had displaced the role of the entrepreneur; the anti-business spirit had a repressive effect on entrepreneurs’ confidence and optimism.7 Today, this second pillar of MISS has been resurrected suggestively by John B. Taylor, who argues the poor recovery is best “explained by policy uncertainty” and “increased regulation” that is unfavorable to business. Likewise, Baker, Bloom, and Davis have forcefully argued that political uncertainty can hold back private investment and economic growth.8

Summers and Krugman, as Keynesians, emphasize a third MISS pillar, derived from Keynes’s famous liquidity trap theory, which contends that the “full-employment real interest rate” has declined in recent years. Indeed, both Summers and Krugman demonstrate that real interest rates have declined over recent decades, therefore moving from an exogenous explanation (as in pillars one and two) to a more endogenous explanation of secular stagnation.9 The ultimate problem here is lack of investment demand, such that, in order for net investment to occur at all, interest rates have to be driven to near zero or below. Their strong argument is that there are now times when negative real interest rates are needed to equate saving and investment with full employment.

However, “interest rates are not fully flexible in modern economies”—in other words, market-determined interest rate adjustments chronically fail to achieve full employment. Summers contends there are financial forces that prohibit the real interest rate from becoming negative; hence, full employment cannot be realized.10

Some theorists contend that there has been demographic structural shifts increasing the supply of saving, thus decreasing interest rates. These shifts include an increase in life expectancy, a decrease in retirement age, and a decline in the growth rate of population.

Others, including Summers, point out that stagnation in capital formation (or accumulation) can be attributed to a decrease in the demand for loanable funds for investment. One mainstream explanation offered for this is that today’s new technologies and companies, such as Google, Microsoft, Amazon, and Facebook, require far less capital investment. Another hypothesis is that there has been an important decrease in the demand for loanable funds, although they argue this is due to a preference for safe assets. These factors can function together to keep the real interest rate very low. The policy implication of secular low interest rates is that monetary policy is more difficult to implement effectually; during a recession, it is weakened and can even become ineffectual.

Edward Glaeser, focusing on “secular joblessness,” places severe doubt on the first pillar of MISS, but then makes a very important additional argument. Glaeser rejects the notion that there has been a slowdown in technological innovation; innovation is simply “unrelenting.” Likewise, he is far less concerned with secular low real interest rates, which may be far more cyclical. “Therefore,” contends Glaeser, “stagnation is likely to be temporary.”

Nonetheless, Glaeser underscores secular joblessness, and thus the dysfunction of U.S. labor markets constitutes a fourth pillar of MISS: “The dysfunction in the labour market is real and serious, and seems unlikely to be solved by any obvious economic trend.” Somehow, then, the problem is due to a misfit of skills or “human capital” on the side of workers, who thus need retraining. “The massive secular trend in joblessness is a terrible social problem for the US, and one that the country must try to address” with targeted policy.11 Glaeser’s argument for the dysfunction of U.S. labor markets is based on recession-generated shocks to employment, specifically of less-skilled U.S. workers. After 1970, when workers lost their job, the damage to human capital became permanent. In short, when human capital depreciates due to unemployment, overall abilities and “talent” are “lost” permanently. This may be because the skills required in today’s economy need to be constantly practiced to be retained. Thus, there is a ratchet-like effect in joblessness caused by recessions, whereby recession-linked joblessness is not fully reversed during recoveries—and all this is related to skills (the human capital of the workers), and not to capital itself. According to Glaeser, the ratchet-like effect of recession-linked joblessness is further exacerbated by the U.S. social-safety net, which has “made joblessness less painful and increased the incentives to stay out of work.”12

Glaeser contends that, if his secular joblessness argument is correct, the macroeconomic fiscal interventions argued for by Summers and Krugman are off-base.13 Instead, the safety net should be redesigned in order to encourage rather than discourage people from working. Additionally, incentives to work need to be radically improved through targeted investments in education and workforce training.14 Such views within the mainstream debate, emphasizing exogenous factors, are generally promoted by freshwater (conservative) rather than saltwater (liberal) economists. Thus, they tend to emphasize supply-side or cost factors.

The fifth pillar of MISS contends that output and productivity growth are stagnant due to a failure to invest in infrastructure, education, and training. Nearly all versions of MISS subscribe to some version of this, although there are both conservative and liberal variations. Barry Eichengreen underscores this pillar and condemns recent U.S. fiscal developments that have “cut to the bone” federal government spending devoted to infrastructure, education, and training.

The fifth pillar of MISS necessarily reflects an imbalance between public and private investment spending. Many theorists maintain that the imbalance between public and private investment spending, hence secular stagnation, “is not inevitable.” For example, Eichengreen contends if “the US experiences secular stagnation, the condition will be self-inflicted. It will reflect the country’s failure to address its infrastructure, education and training needs. It will reflect its failure to…support aggregate demand in an effort to bring the long-term unemployed back into the labour market.”15

The sixth pillar of MISS argues that the “debt overhang” from the overleveraging of financial firms and households, as well as private and public indebtedness, are a serious drag on the economy. This position has been argued for most forcefully by several colleagues of Summers at Harvard, most notably Carmen Reinhart and Kenneth Rogoff.16 Atif Mian and Amir Sufi also argue that household indebtedness was the primary culprit causing the economic collapse of 2007–2008. Their policy recommendation is that the risk to mortgage borrowers must be reduced to avoid future calamities.17

As noted, the defenders of MISS do not necessarily support a compatibility between the above six pillars: those favored by conservatives are supply-side and exogenous in emphasis, while liberals tend towards demand-side and endogenous ones. Instead, most often these pillars are developed as competing theories to explain the warrant of some aspect of secular stagnation, and/or to defend particular policy positions while criticizing alternative policy positions. However, the concern here is not whether there is the possibility for a synthesis of mainstream views. Rather, the emphasis is on how partial and separate such explanations are, both individually and in combination.

Neoliberal economy actually needs bubbles to function

As Krugman said "We now know that the economic expansion of 2003-2007 was driven by a bubble. You can say the same about the latter part of the 90s expansion; and you can in fact say the same about the later years of the Reagan expansion, which was driven at that point by runaway thrift institutions and a large bubble in commercial real estate." In other words blowing bubbles is the fundamental way neoliberal economy functions, not an anomaly.

As much as the USA population is accustomed to hypocrisy of the ruling elite and is brainwashed by MSM, this news, delivered to them personally by the crisis of 2008 was too much for them not question the fundamentals (A Primer on Neoliberalism):

Of course, the irony that those same institutions would now themselves agree that those “anti-capitalist” regulations are required is of course barely noted. Such options now being considered are not anti-capitalist. However, they could be described as more regulatory or managed rather than completely free or laissez faire capitalism, which critics of regulation have often preferred.

But a regulatory capitalist economy is very different to a state-based command economy, the style of which the Soviet Union was known for. The points is that there are various forms of capitalism, not just the black-and-white capitalism and communism. And at the same time, the most extreme forms of capitalism can also lead to the bigger bubbles and the bigger busts.

In that context, the financial crisis, as severe as it was, led to key architects of the system admitting to flaws in key aspects of the ideology.

At the end of 2008, Alan Greenspan was summoned to the U.S. Congress to testify about the financial crisis. His tenure at the Federal Reserve had been long and lauded, and Congress wanted to know what had gone wrong. Henry Waxman questioned him:

[Greenspan’s flaw] warped his view about how the world was organized, about the sociology of the market. And Greenspan is not alone. Larry Summers, the president’s senior economic advisor, has had to come to terms with a similar error—his view that the market was inherently self-stabilizing has been “dealt a fatal blow.” Hank Paulson, Bush’s treasury secretary, has shrugged his shoulders with similar resignation. Even Jim Cramer from CNBC’s Mad Money admitted defeat: “The only guy who really called this right was Karl Marx.” One after the other, the celebrants of the free market are finding themselves, to use the language of the market, corrected.

Raj Patel, Flaw PDF formatted document, The Value of Nothing, (Picador, 2010), pp.4, 6-7

Now for the second time in history, the challenge is to save capitalism from itself

Now for the second time in history, the challenge is to save capitalism from itself: to recognize the great strengths of open, competitive markets while rejecting the extreme capitalism and unrestrained greed that have perverted so much of the global financial system in recent times. It took such a statesman as Franklin Delano Roosevelt to rebuild American capitalism after the Great Depression. New Deal policies allowed to rebuild postwar domestic demand, to engineer the Marshall Plan to rebuild Europe and to set in place the Bretton Woods system to govern international economic engagement.

With the abolishment of those policies blowing of one bubble after another, each followed by a financial crisis  became standard chain of the events. Since 1973 we already have a half-dozen bubbles following by economic crisis. It started with  Savings and loan crisis which partially was caused by the deregulation of S&Ls in 1980, by the Depository Institutions Deregulation and Monetary Control Act signed by President Jimmy Carter on March 31, 1980, an important step is a series that eliminated regulations initially designed to prevent lending excesses and minimize failures.

To hide this unpleasant fact neoliberals resort to so called the Great Neoliberal Lie:

What is neoliberalism

The fallacious and utterly misleading argument that the global economic crisis (credit crunch) was caused by excessive state spending, rather than by the reckless gambling of the deregulated, neoliberalized financial sector.

Just as with other pseudo-scientific theories and fundamentalist ideologies, the excuse that "we just weren't fundamentalist enough last time" is always there. The neoliberal pushers of the establishment know that pure free-market economies are as much of an absurd fairytale as 100% pure communist economies, however they keep pushing for further privatizations, tax cuts for the rich, wage repression for the ordinary, and reckless financial sector deregulations precisely because they are the direct beneficiaries of these policies. Take the constantly widening wealth gap in the UK throughout three decades of neoliberal policy. The minority of beneficiaries from this ever widening wealth gap are the business classes, financial sector workers, the mainstream media elite and the political classes. It is no wonder at all that these people think neoliberalism is a successful ideology. Within their bubbles of wealth and privilege it has been. To everyone else it has been an absolute disaster.

Returning to a point I raised earlier in the article; one of the main problems with the concept of "neoliberalism" is the nebulousness of the definition. It is like a form of libertarianism, however it completely neglects the fundamental libertarian idea of non-aggression. In fact, it is so closely related to that other (highly aggressive) US born political ideology of Neo-Conservatism that many people get the two concepts muddled up. A true libertarian would never approve of vast taxpayer funded military budgets, the waging of imperialist wars of aggression nor the wanton destruction of the environment in pursuit of profit.

Another concept that is closely related to neoliberalism is the ideology of minarchism (small stateism), however the neoliberal brigade seem perfectly happy to ignore the small-state ideology when it suits their personal interests. Take the vast banker bailouts (the biggest state subsidies in human history) that were needed to save the neoliberalised global financial sector from the consequences of their own reckless gambling, the exponential growth of the parasitic corporate outsourcing sector (corporations that make virtually 100% of their turnover from the state) and the ludicrous housing subsidies (such as "Help to Buy and Housing Benefits) that have fueled the reinflation of yet another property Ponzi bubble.

The Godfather of neoliberalism was Milton Friedman. He made the case that illegal drugs should be legalised in order to create a free-market drug trade, which is one of the very few things I agreed with him about. However this is politically inconvenient (because the illegal drug market is a vital source of financial sector liquidity) so unlike so many of his neoliberal ideas that have consistently failed, yet remain incredibly popular with the wealthy elite, Friedman's libertarian drug legalisation proposals have never even been tried out.

The fact that neoliberals are so often prepared to ignore the fundamental principles of libertarianism (the non-aggression principle, drug legalisation, individual freedoms, the right to peaceful protest ...) and abuse the fundamental principles of small state minarchism (vast taxpayer funded bailouts for their financial sector friends, £billions in taxpayer funded outsourcing contracts, alcohol price fixing schemes) demonstrate that neoliberalism is actually more like Ayn Rand's barmy (greed is the only virtue, all other "virtues" are aberrations) pseudo-philosophical ideology of objectivism  than a set of formal economic theories.

The result of neoliberal economic theories has been proven time and again. Countries that embrace the neoliberal pseudo-economic ideology end up with "crony capitalism", where the poor and ordinary suffer "austerity", wage repression, revocation of labor rights and the right to protest, whilst a tiny cabal of corporate interests and establishment insiders enrich themselves via anti-competitive practices, outright criminality and corruption and vast socialism-for-the-rich schemes.

Neoliberal fanatics in powerful positions have demonstrated time and again that they will willingly ditch their right-wing libertarian and minarchist "principles" if those principles happen to conflict with their own personal self-interest. Neoliberalism is less of a formal set of economic theories than an error strewn obfuscation narrative to promote the economic interests, and  justify the personal greed of the wealthy, self-serving establishment elite.
 

Bubbles as the neoliberal tool for wealth redistribution

The 1930s, a well researched period of balance-sheet recession, provides some interesting perspective despite large historical distance.  Roosevelt was no socialist, but his New Deal did frighten many businesses, especially large business which BTW attempted a coupe to remove him from is position. Fortunately for Roosevelt CIA did not exist yet.  And New Deal  government projects has been much bigger and bolder, then anything Obama ever tried, because Obama administration was constrained in its action by dominant neoliberal thinking. Like regulatory capture, which is an immanent feature of neoliberalism,  there is also less known and less visible ideological capture of the government. Which also makes neoliberalism more similar to bolshevism as this ideological capture and related inability of the USSR elite to modernize the economy on some "mixed" principles, when over-centralization stopped working. It, along with the collapse of the ideology,  probably was one of the main reasons of the collapse of the USSR.  Chinese leadership managed to do this and introduced "new economic policies"(NEP). 

Uner New deal regime when public investment and hence aggregate demand expanded, the economy started to grow anyway. Roosevelt did have a vision and he did convince the electorate about the way to go. Cheap optimism of Reagan, or even audacity of hope "Obama style" were not enough. After all, as Francis Bacon may remind us: “Hope is a good breakfast, but it is a bad supper” (Apophthegms, 1624).

Obama/Bernanke-style attempts to stimulate growth by pure injection of cheap money in this environment not only inflate new bubbles instead of old one, with which the fighting starts. They also lead to massive redistribution of wealth that makes the problem even worse:

Paul Krugman tells us that Larry Summers joined the camp concerned about secular stagnation in his I.M.F. talk last week, something that I had not picked up from prior coverage of the session. This is good news, but I would qualify a few of the points that Krugman makes in his elaboration of Summers' remarks.

First, while the economy may presently need asset bubbles to maintain full employment (a point I made in Plunder and Blunder: The Rise and Fall of the Bubble Economy), it doesn't follow that we should not be concerned about asset bubbles. The problem with bubbles is that their inflation and inevitable deflation lead to massive redistribution of wealth.

Larry Summers was the first establishment economist who conceded that this is the fact (Wikipedia)

... Larry Summers presented his view during November 2013 that secular (long-term) stagnation may be a reason that U.S. growth is insufficient to reach full employment: "Suppose then that the short term real interest rate that was consistent with full employment [i.e., the "natural rate"] had fallen to negative two or negative three percent. Even with artificial stimulus to demand you wouldn't see any excess demand. Even with a resumption in normal credit conditions you would have a lot of difficulty getting back to full employment."[13][14]

Robert J. Gordon wrote in August 2012:

"Even if innovation were to continue into the future at the rate of the two decades before 2007, the U.S. faces six headwinds that are in the process of dragging long-term growth to half or less of the 1.9 percent annual rate experienced between 1860 and 2007. These include demography, education, inequality, globalization, energy/environment, and the overhang of consumer and government debt. A provocative 'exercise in subtraction' suggests that future growth in consumption per capita for the bottom 99 percent of the income distribution could fall below 0.5 percent per year for an extended period of decades".[15]

One hypothesis is that high levels of productivity greater than the economic growth rate are creating economic slack, in which fewer workers are required to meet the demand for goods and services. Firms have less incentive to invest and instead prefer to hold cash. Journalist Marco Nappolini wrote in November 2013:

 "If the expected return on investment over the short term is presumed to be lower than the cost of holding cash then even pushing interest rates to zero will have little effect. That is, if you cannot push real interest rates below the so-called short run natural rate [i.e., the rate of interest required to achieve the growth rate necessary to achieve full employment] you will struggle to bring forward future consumption, blunting the short run effectiveness of monetary policy...Moreover, if you fail to bring it below the long run natural rate there is a strong disincentive to increase fixed capital investment and a consequent preference to hold cash or cash-like instruments in an attempt to mitigate risk. This could cause longer-term hysteresis effects and reduce an economy's potential output."[13] 

Cost of energy as a defining new factor

The cost of energy is probably another reason of secular stagnation along with excessive public and private debt. Rising cost of energy is deadly for capitalism.  Here are some comments that might clarify the situation:

raskolnikov:

This is the biggest crybaby column Krugman's ever written. He should be ashamed of himself and return his Nobel prize immediately. Has he ever put down Keynes long enough to read a little Marx?  Here's Robert Brenner summing it up in 2009:

 What mainly accounts for the long-term weakening of the real economy is a deep, and lasting, decline of the rate of return on capital investment since the end of the 1960s.

The failure of the rate of profit to recover is all the more remarkable, in view of the huge drop-off in the growth of real wages over the period.

The main cause, though not the only cause, of the decline in the rate of profit has been a persistent tendency to overcapacity in global manufacturing industries."

 There's more, too. Instead of siding with crackpot Summers, Krugman should expand his research and be of some use to us all.

Kievite

I am not sure that it is correct to think about public debt as internal debt. It's all about energy.

That means that public debt is to a large extent foreign due to unalterable oil consumption (and related trade deficits). And that completely changes the situation unless you are the owner of the world reserve currency.

But even in the latter case (exorbitant privilege as Valéry Giscard d'Estaing called it ) you can expect attacks on the status of the currency as world reserve currency. The growth is still supported via militarization, forced opening of foreign markets (with military force, if necessary) and conversion of the state into national security state. But as Napoleon admitted "You can do anything with bayonets except sit on them"

One positive thing about high public (and to a large extent foreign owned) debt in the USA is that it undermines what Bacevich called "new American militarism" (http://www.amazon.com/The-New-American-Militarism-Americans/dp/0195173384). Bacevich argues that this is distinct political course adopted by the "defense intellectuals," the evangelicals, and the neocons. And they will never regret their failed efforts such as Iraq invasion.

From Amazon review:

=== Quote ===

Bacevich clearly links our present predicaments both at home and abroad to the ever greater need for natural resources, especially oil from the Persian Gulf. He demolishes all of the reasons for our bellicosity based on ideals and links it directly to our insatiable appetite for oil and economic expansion. Naturally, like thousands of writers before him, he points out the need for a national energy policy based on more effective use of resources and alternative means of production.

=== End of Quote ==

Heinberg's Five Axioms of Sustainability

As Heinberg explained fossil fuels, primarily oil, permeate every aspect of our modern culture - from agriculture to cities and a long-term perspective. In the age of almost 7 billion people demanding more and more of limited resources, the media, politicians and governments tend to only report short-term perspectives and ignore Heinberg's Five Axioms of Sustainability to the extent that these concepts are taboo to be spoken, discussed or thought (Heinberg, Richard (2007) Five Axioms of Sustainability):

1. (Tainter’s Axiom): Any society that continues to use critical resources unsustainably will collapse.

Exception: A society can avoid collapse by finding replacement resources.

Limit to the exception: In a finite world, the number of possible replacements is also finite.

...

2. (Bartlett’s Axiom): Population growth and/or growth in the rates of consumption of resources cannot be sustained.

...

3. To be sustainable, the use of renewable resources must proceed at a rate that is less than or equal to the rate of natural replenishment.

...

4. To be sustainable, the use of non-renewable resources must proceed at a rate that is declining, and the rate of decline must be greater than or equal to the rate of depletion.

The rate of depletion is defined as the amount being extracted and used during a specified time interval (usually a year) as a percentage of the amount left to extract.

...

5. Sustainability requires that substances introduced into the environment from human activities be minimized and rendered harmless to biosphere functions.

In cases where pollution from the extraction and consumption of non-renewable resources that has proceeded at expanding rates for some time threatens the viability of ecosystems, reduction in the rates of extraction and consumption of those resources may need to occur at a rate greater than the rate of depletion. 

Archaeologist Joseph Tainter, in his classic study The Collapse of Complex Societies (1988), demonstrated that collapse is a frequent if not universal fate of complex societies and argued that collapse results from declining returns on efforts to support growing levels of societal complexity using energy harvested from the environment.  Jared Diamond’s popular book Collapse: How Societies Choose to Fail or Succeed (2005) similarly  makes the argument that collapse is the common destiny of societies that ignore resourse constraints. This axiom defines sustainability by the consequences of its absence—that is, collapse.

Historical periods of stagnation in the United States

Adapted from Wikipedia

Excluding the current, there were two period of stagnation in the USA history:

Construction of structures, residential, commercial and industrial, fell off dramatically during the depression, but housing was well on its way to recovering by the late 1930s.[17]

The depression years were the period of the highest total factor productivity growth in the United States, primarily to the building of roads and bridges, abandonment of unneeded railroad track and reduction in railroad employment, expansion of electric utilities and improvements wholesale and retail distribution.[17]

The war created pent up demand for many items as factories that once produced automobiles and other machinery converted to production of tanks, guns, military vehicles and supplies. Tires had been rationed due to shortages of natural rubber; however, the U.S. government built synthetic rubber plants. The U.S. government also built synthetic ammonia plants, aluminum smelters, aviation fuel refineries and aircraft engine factories during the war.[17] After the war commercial aviation, plastics and synthetic rubber would become major industries and synthetic ammonia was used for fertilizer. The end of armaments production free up hundreds of thousands of machine tools, which were made available for other industries. They were needed in the rapidly growing aircraft manufacturing industry.[18]

The memory of war created a need for preparedness in the United States. This resulted in constant spending for defense programs, creating what President Eisenhower called the military-industrial complex.

U.S. birth rates began to recover by the time of World War II, and turned into the baby boom of the postwar decades. A building boom commenced in the years following the war. Suburbs began a rapid expansion and automobile ownership increased.[17]

High-yielding crops and chemical fertilizers dramatically increased crop yields and greatly lowered the cost of food, giving consumers more discretionary income. Railroad locomotives switched from steam to diesel power, with a large increase in fuel efficiency. Most importantly, cheap food essentially eliminated malnutrition in countries like the United States and much of Europe.

Many trends that began before the war continued:

Researchers who contributed to understating secular stagnation

One of the first researchers who clearly attributed secular stagnation problem to neoliberalism was Alan Nasser, Professor Emeritus of Political Economy and Philosophy at The Evergreen State College. In his September 22, 2005 paper  ECONOMIC LAWS, STRUCTURAL TENDENCIES, SECULAR STAGNATION THEORY, AND THE FATE OF NEOLIBERALISM  he pointed out the key features of secular stagnation long before Summers started to understand the problem  and even befor the economic crash of 2008 ;-)

September 22, 2005 | alannasser.org

Alan Nasser Invited presentation, University of Lille,

"We have now grown used to the idea that most ordinary or natural growth processes (the growth of organisms, or popu- lations of organisms or, for example, of cities) is not merely limited, but self-limited, i.e. is slowed down or eventually brought to a standstill as a consequence of the act of growth itself. For one reason or another, but always for some reason, organisms cannot grow indefinitely, just as beyond a certain level of size or density a population defeats its own capacity for further growth."

Sir Peter Medawar, The Revolution of Hope

"A business firm grows and attains great strength, and afterwards perhaps stagnates and decays; and at the turning point there is a balancing or equilibrium of the forces of life and decay. And as we reach to the higher stages of our work, we shall need ever more and more to think of economic forces as those which make a young man grow in strength until he reaches his prime; after which he gradually becomes stiff and inactive, till at last he sinks to make room for other and more vigorous life."

Alfred Marshall, Principals of Economics (1890)

"Though Keynes's 'breakdown theory is quite different from Marx's, it has an important feature in common with the latter: in both theories, the breakdown is motivated by causes inherent to the working of the economic engine, not by the action of factors external to it."

Joseph Schumpeter, Ten Great Economists

In this paper I shall address two major issues. Firstly, I shall discuss the implications for economic theory of a conception of economic laws widely at variance with the empiricist and/or positivist account of what laws are, how they are discovered, and how they are related to theory. At the same time, I will reject one cornerstone of anti-positivist thought, namely the idea that one cannot provide an account of laws that is fundamentally the same for the natural and the social sciences. Thus, I shall argue that an anti-positivist account of laws is entirely compatible with a conception of scientific laws that applies to both the "hard" (natural) and the "soft" (social) sciences. I shall defend this position by showing its application to economics and economic laws. In doing so, I will compare and contrast both natural-scientific (primarily physical) laws and social-scientific (primarily economic) laws. Secondly, I will argue that perhaps the most significant economic law descriptive of mature capitalism is the law of secular stagnation. The latter states that it is the natural tendency of a developed, industrialized capitalist economy to default to a state of chronic excess capacity and underconsumption. And this is itself a result of the tendency in advanced capitalism for the economic surplus (roughly, the difference between the Gross Domectic Product and the cost of producing the GDP) to grow at a rate more rapid than the growth of profitable industrial investment opportunities. In the course of my discussion I will use the United States as a paradigm case, Much as Marx attempted to identify the underlying features of the accumulation process by reference to England during the Industrial Revulution.

This has in fact been the state of global capital since the end of the "Golden Age" and the commencement of the age of globalized Reaganism/Thatcherism, i.e. the Age of Neoliberalism. I date the transition as commencing in 1973, the last year of post-War Keynesian growth rates in the USA. In fact, I will argue, neoliberal economic policy exacerbates capitalism'a tendency to stagnation. Let me begin with an account of economic laws.

LAWS, GENERATIVE MECHANISMS AND TENDENCIES

On the Humean or radical empiricist (positivist) account of laws, the latter are descriptions of observed regularities. Presumably, the scientist observes a "constant conjunction" of different kinds of happening, and infers from the regularity of the conjunction that the latter could not be merely accidental, and so concludes that the observed pattern of regularities must be nomological or law-like. 'Sodium chloride dissolves in water' and 'Metal expands when heated' would be simple examples of the results of this account of how laws of nature are discovered.

That this empiricist account is flawed becomes evident when we consider full-fledged laws of a genuine natural science, e.g. physics. I emphasize that laws are components of theories, which themselves are constitutive of established scientific disciplines, such as physics, chemistry, and biology. In fact, the two "laws" mentioned at the end of the preceding paragraph are not laws of physics at all. Among the genuine laws of physics is, e.g., 'Falling bodies near the surface of the earth accelerate at a constant rate.' This law is certainly not established by the observation of repeated conjunctions of events. On the contrary, actually observed falling bodies in "open systems", that is, in the circumstances of everyday life, conspicuously fail to conform to this law. Yet this is not taken to refute the law. For the law describes the behavior of bodies in a vacuum, that is to say, in a "closed system", one created by the scientist, typically in a laboratory situation. Philosophers of science have tended to ignore the distinction between regularities observed only in closed systems, and conjunctions observed in everyday life, which, as such, have no value as contributions to scientific knowledge. These philosophers have, accordingly, written as if the regularities in question were features of open systems, of nature. This confusion impedes our understanding of all types of laws, from physical to economic.

This failure –until relatively recently- of philosophers of science to properly attend to the importance of laboratory work in the acquisition of scientific knowledge is due to the fact that these philosophers have focused almost exclusively on science as established theory, i.e. as a way of representing the world. They had ignored how these theories were actually established. That is, they paid little attention to experiment, which is a way of intervening in the world. This inattention to what happens in closed systems created in the laboratory led thinkers to miss the importance of the concept of tendencies or dispositions in grasping the concept of a law of science. Let us dwell on this point and its relation to economic laws.

It is not that our knowledge of natural laws is not based on observed regularities. The point, rather, is that these regularities are not found in nature. They are found in closed systems, elaborately designed experimental circumstances found in laboratories. Yet, we correctly believe that what we learn in experimental situations gives us knowledge that is not confined to these situations. We believe that what we learn from observations of repeated patterns in experiments gives us not only knowledge of the behavior of objects in laboratory circumstances, but also knowledge of these same (kinds of) objects as they behave in nature, in the open systems of everyday life. But scientifically significant repeated patterns are not found in the world of daily life. This raises profound epistemological and ontological questions.

The most significant epistemological question arises from the following consideration: Were it not for the intervention of the experimenter, closed-system regularities would not obtain. Hence, the experimenter is a causal agent of the pattern of regularities observed in the laboratory. It is these contrived conjunctions which we invoke to justify our belief in (usually causal) laws. And while these regularities are the (partial) result of the intervention of the experimenter, we do not believe that the experimenter in any way originates the laws whose existence is attested to by the contrived regularities. The question therefore arises: What justifies our (correct) belief that knowledge obtained in closed laboratory systems designed by an agent applies also in open systems, i.e. in nature, which of course is not designed by scientists and does not evidence the regularities found under designed experimental circumstances?

I want to suggest that this question comes to the same as the following question: What must nature be like, and what must experiment reveal, in order for experimental knowledge to be able to be legitimately extended to the world outside of the laboratory, i.e. to nature? Note that this is a Realist question: it asks what we must presuppose about the constitution of the world in order that our experimentally-based scientific beliefs be justified. This is the precise Realist counterpart to Kant's Idealist question: What must we presoppose our minds –as opposed to nature or the world- to be like in order for scientific knowledge to be possible? I will argue that the answer to our Realist question provides the conceptual resources to elucidate the general nature of economic laws and economic theory, and the nature of the subject matter investigated by economists.

I will argue that since we believe that what we learn by experimental observation justifies our claim to knowledge of the experimental objects as they behave in nature, we must assume that these objects possess natural structures, similar to what Aristotle and the scholastics called "natures" or "essences." A natural structure must be conceived as what Critical Realists call a generative mechanism (hereafter, GM). The latter is a specific mode of material organization. What GMs generate are tendencies or dispositions to behave in characteristic ways. The statement that a physical thing or a social institution or structure tends to generate characteristic regularities is a statement of a law. The natural structure of salt, expressed in chemistry as HCl, is such that when it is mixed with water, whose natural structure or organization is expressed as H2O, it tends to dissolve. Gases tend to expand when heated and falling bodies near the surface of the earth tend to accelerate at a constant rate. These are statements of chemical and physical laws. We shall see that precisely the same kind of analysis can be made of laws in economics.

Tendencies are not the same as trends. The latter are merely observed regularities; there need be no implication that an underlying structural feature of the thing in question generates the regularity. This feature of laws is reflected in ordinary language in non-scientific contexts: we might say "He has a tendency to exaggerate." We mean that a disposition to exaggerate is a natural expression of his underlying character. We do not usually mean that he exaggerates whenever it is possible for him to exaggerate. This is part of the meaning of 'tendency.' Thus, tendencies can exist without being exercised. This happens when, e.g. salt is not mixed with water. Salt's nomological tendency to dissolve in water remains its categorical property even in the absence of circumstances in which its tendency to dissolve can be exercised. In addition, tendencies can be exercised without being realized. This is the case in the natural sciences when we observe, in non-laboratory situations, falling bodies accelerating at different rates. Indeed, no falling body in open systems is observed to accelerate at a constant or the same rate. But of course this is not taken to falsify the law of falling bodies. In nature, GMs continue to act in their characteristic ways without producing the patterned outcomes observable in closed experimental systems. This is so because in nature a multiplicity of GMs combine, interact and collide such as to result in the (scientifically irrelevant) flux of phenomena of the everyday world. The realization of a natural tendency can, in other words, be offset by counteracting forces. Thus, empiricism's mistake is to fail to recognize that GMs operate independent of the effects they generate. That is, GMs endure and go on acting (in the way that experimental closure enables us to identify) in nature, i.e. in open systems, where patterned regularities do not prevail. Statements about tendencies are not equivalent, salva veritate, to statements about their effects. Laws may exist and exercise their tendencies or powers even though no Humean "constant conjunctions" are observed. (This would be the case if it happened that the practice of creating closed experimental conditions had never been engaged in, i.e. in a world without science.)

LAWS, GENERATIVE MECHANISMS AND TENDENCIES IN ECONOMICS

GMs are not confined to the natural world. Natural structures are not the only structures there are. Plainly, there are humanely constructed structures. Capitalism is one such structure. Structures of this kind, GMs, that are dynamic by nature, i.e. which are characteristically diachronic, be they natural or socially constituted, share the same ontology. This should not be confused with the radical empiricist (positivist) claim that the natural and the social sciences share the same method. Clearly they do not: closed experimental situations exist but are not typical i istic outcomes ceteris paribus, ie. other things being equal, i.e. ceteris absentibus, other things being absent. When we identify the tendency of a thing, we specify what will happen, as a matter of course, if interfering conditions are absent. That is the point of vacuums in the closed systems created in laboratory experiments: they permit exercised tendencies, i.e. tendencies in operation, to be realized. If we want to know what gases tend to do when acted upon by heat, we eliminate all potential counteracting forces by creating a vacuum in the chamber, so that both gas and heat can express their natures unimpeded.

Thus, implicit in both physical- and social-scientific practice is the crucial distinction between the exercise and the realization (or manifestation) of a tendency. This distinction is essential to structural analysis in economics because of the impossibility of creating the social equivalent of a vacuum in the social sciences, which deal with the open systems of everyday life, where a great many forces and tendencies collide. Accordingly, just as the law of the tendency of falling bodies to accelerate at a constant rate is not falsified by the failure of falling bodies to behave accordingly in open systems, so too, e.g., the law of the tendency of the growth of productive capacity to outpace the growth of profitable investment opportunities -the thesis of secular stagnation theory- is not undermined by the remarkable growth rates of the Golden Age. In both cases, the presence of offsetting factors prevents the structurally generated tendency from being realized or manifested. I argue that the same can be said for any putative economic law.

In social science –and this is most conspicuous in economics, the most theoretically developed of the human sciences- we compensate for the absence of experimentally closed systems by constructing their functional equivalent, which we might call, in terms redolent of Weber, an ideal-typical theoretical model. It is an unfortunate habit (perhaps a tendency in the above-elaborated sense…) of mainstream economists to employ these models as if they described the open-system observable facts of economic life. This is, I suspect, a consequence of the economic empiricist's mistake referred to above, namely to think that GMs, if they must be spoken of at all, are to be conceived as reducible to their effects. (Recall Hume's claim, inspired by his reading of Newton, to expunge all notions of "power", "generation" and "production" from his analyses.) But, as noted above, GMs in both the social and the natural sciences employ unrealistic models, i.e. models which do not pretend to offer the equivalent of a photographic representation of the world. In both natural-scientific experiments and social-scientific ideal-type models, an attempt is made to abstract from the nonessential. We seek to place the spotlight of theory on what is necessary to the situation, system or institution under investigation, and to prescind from the arbitrary and accidental. In economics we seek to identify those features of capitalism that make it what it is. This enables us to identify capitalism's distinct and characteristic tendencies, and to describe what will happen as a result of the exercise of these tendencies, ceteris absentibus.

That there are such tendencies seems to me to be uncontroversial. We all know, for example, that cyclical downturns are not mere empirical contingencies of capitalist development, but structurally generated tendencies which follow inexorably from the specific mode of organization (structure) of capitalism. And like all tendencies, their realization can be offset, as we have seen above, by counteracting factors, such as fiscal and monetary policy. Other examples would be what Marx called the tendencies of capital to concentrate and centralize. The tendency, and corresponding law, with which I will be primarily concerned in this paper is constitutive of the theory of secular stagnation, and is far more likely than the immediately foregoing examples to generate controversy. I refer to the tendency of mature capitalism to suffer from a chronic paucity of profitable industrial investment opportunities, relative to the great magnitude of its investable surplus. Let us look more closely at this tendency.

THE THEORY OF SECULAR STAGNATION

It is worth mentioning that the view that the continuous accumulation of capital is both essential to the normal development of capitalist societies and essentially self-limiting was held by virtually all of the major modern political economists, in the form of one version or another of the doctrine of the falling rate of profit. Adam Smith explained the secular decline of the profit rate by the increasing abundance of capital in a developing capitalist society. Ricardo and Mill believed that the rate of profit would be depressed by the diminishing productivity of the land which would drive up the price of wage goods and therefore of the wages of labor, and so drive down the profits of capital. Marx pointed to the increasing capital-intensity of industry and the paucity of working-class purchasing power relative to the productive capacity of the economy, as the principal threat to the profit rate. And Keynes held that in mature capitalist economies the "marginal efficiency of capital", i.e. the expected rate of return (over cost) on an additional unit of a given capital asset, would tend to decline. All these thinkers had an at least intuitive appreciation of the fact that the growth of capital tends to be terminally self-limiting. (It is worth citing a remark of Joseph Shumpeter at this point:

"Though Keynes's 'breakdown theory is quite different from Marx's, it has an important feature in common with the latter: in both theories, the breakdown is motivated by causes inherent to the working of the economic engine, not by the action of factors external to it.")

In my estimation, no one understood the underlying dynamics of the tendency to stagnation better than the Polish economist Michal Kalecki, who is known to have developed the essentials of Keynes's General Theory before Keynes himself (and to have produced far more elegant mathematical formulations thereof). Perhaps the best way to understand Kalecki's thought is to see him as having argued that certain features of a not-yet-mature industrializing economy persist after the process of industrialization has been accomplished, with the effect that the developed capitalist economy is saddled with a problem of chronic excess capacity. Let me sketch this train of thought.

In the course of their natural growth capitalist economies reach a level of industrial development characterizable as maturity, a point beyond which growth must either cease, or be sustained by exogenous (in a sense to be elucidated below) means. Straight away we are confronted with a rejection of an assumption that is implicit in mainstream neoclassical theory, viz. that both the supply and the demand curves shift, virtually automatically, to the right. On the stagnationist conceptualization of growth or development, the process of development is not everlasting, but rather is at some point accomplished. There is the period, industrialization, during which the economy is developing, and which culminates in a (finally) industrialized or developed infrastructure. At this stage there will have been built up, or "accumulated", a complement of plant and equipment in steel production, machine tools, power stations, transport systems, etc., that is capable of satisfying a level of consumption demand consistent with the moral limits of a reasonably civilized style of life, the constraints imposed by a finite fund of natural resources, and, most importantly for stagnation theory, the limited possibilities of what Marx called "expanded reproduction" imposed by the accumulation process itself.

This account point can be expanded as follows. During any period of industrialization, the growth of the capital goods industry (hereafter, following Marx, Department I, or DI) must outpace the growth of the consumption goods industries (hereafter, again following Marx, Department II, or DII). Indeed, it belongs to the nature of the process of industrialization that the demand for the output of DI cannot be a function of the behavior of consumption demand; during industrialization, investment demand is both rapid and relatively autonomous. For if the principal project is to develop the means of production, then a disproportionate share of national wealth must be devoted to investment/accumulation at the expense of consumption. Strategic capital goods such as transport and communications networks and steel mills cannot be built bit by bit. This is clear with respect to railroads (Recall Keynes's remark that "Two pyramids are better than one, and two masses for the dead better than one; but two railroads from London to York are not necessarily better than one."), but perhaps not as clear with respect to steel facilities.

Suppose 1) that the efficient production of steel requires equipment with the capacity to produce 200,000 tons of steel, and 2) that demand turns out to be for 300,000 tons. The investor has two alternatives, either to forgo an extra market or to take a chance and add another 200.000 tons. On the second alternative, the one virtually assured in a period of (rapid) industrialization, the manufacturer is left with a surplus capacity of 100,000 tons. Here we see, writ small, a crucial source of two basic tendencies of capitalist development, the unrelenting pressure to expand markets, and the tendency to overproduction of a specific kind, namely the overproduction of capital goods, the tendency to overaccumulation. Each of these tendencies is the basis of a corresponding law of economics: Wherever we find a competitive, profit-driven market economy, we must also find a system-driven tendency to expand markets, and: Wherever we find a competitive, profit-driven market economy, we must also find a system-driven tendency for the growth of productive capacity to outpace the growth of effective demand.

As we have seen, all the major classical political economists anticipated the stationary state; they all assumed that the period of development or industrialization would come to an end. Basic industries would be in place, and DI would be capable of meeting all the replacement and expansion demands of DII. Prescinding for the moment from the emergence of new industries, DI would no longer be a source of substantial expansion demand for its own output; most of DI's internal expansion demand would be extinct.

But this is not th hread of classical (and perhaps neoclassical) theory contains the assurance that the capitalist economy provides a mechanism that in the long run counteracts the tendency of the demand for the products of DI to peter out. As one might expect, this is the price mechanism, which brings about, in the circumstances described above, a falling rate of profit (or interest) and thereby a simultaneous check on accumulation and spur to consumption. The causal chain is simple: the fall of the profit rate would lower capital's share of national income, i.e. it would transfer income from capital to labor. Thus, the demand gap created by the sharp waning of DI's expansion demand would be made up by the increase in consumption demand, which would of course mean an expansion in the demand for the output of DII. Moreover, an immediate expansion of DII at the expense of DI in order to assure a rapid transition out of the stationary state would be entirely feasible given the adaptability of certain key industries in DI to new market conditions resulting from the newly-expanded purchasing power of the working class. The construction of new factories could, for example, yield to the construction of new homes.

The theoretical elegance of this scenario is impressive -almost inspirational- but, alas for illusions, the price mechanism does not work this way. For the above-mentioned transfer in national income from capital to labor is supposed to happen when industrialization comes to an end by virtue of its having been accomplished. But from the capitalists' perspective, it is as if nothing counts as industrialization coming to an end. New industries, for example, can create a situation functionally equivalent to industrialization. "Accumulate, accumulate, that is Moses and the prophets."

We have at this point arrived at a picture of a developed capitalist economy which is in a state of permanent industrialization. Excess capacity prevails and working-class income is stagnant or declining. Interestingly, this has in fact been the state of both the U.S. and the global economy since 1973. According to the foregoing analysis, this reflects the fact that the U.S. and global economies are now instances not merely of the exercise of the law of the tendency of mature capitalism to stagnate, but of its realization. To put it differently: these economies are now in their natural state.

But important questions immediately arise. Why are these economies in their natural state now? And if there is a structurally generated tendency for capitalist economies to stagnate, how shall we account for the historically unprecedented growth rates of the Golden Age? I have barely sketched an outline of a response to these challenges above: if there is indeed a tendency for capitalism to stagnate, then there must have been in operation during the Golden Age what I called "counteracting forces and tendencies" which had spent themselves by the mid-1970s. In the absence of new offsetting forces, the tendency to stagnate has, as we should expect, re-asserted itself. These claims require further elaboration, and it is to this task that I now turn.

SECULAR STAGNATION AND TRANSFORMATIONAL GROWTH

In order to account for the actual pattern of capitalist growth in the context of stagnation theory, we must reflect on the kind of growth required by capitalist economic arrangements. Mainstream theory does not distinguish between kinds of growth if and when it addresses the specific requirements of capitalist growth at all. This is, I believe, a serious error. I will begin by introducing the notion of transformational growth, which transforms the entire way of life of society and absorbs exceptionally large amounts of the investible surplus. My point shall be that a capitalist economy cannot sustain growth merely by producing more and more different types of widgets, in the absence of pervasive structural change. Growth sustained in the latter manner is transformational growth.

We are forced to introduce the concept of transformational growth for reasons related to my earlier discussion of the structural features of mature capitalism which generates a chronic tendency to stagnation. I will now embellish this analysis. It should be clear that capitalism cannot grow in the way in which a balloon grows: its growth cannot leave its proportions intact, i.e. such that there are no new products and no new processes of production. This is to say that a capitalist economy either undergoes transformational growth or it stagnates. The argument is as follows.

Investment expands productive capacity, which in turn requires that demand increase at the same rate as potential production. Without the required rate of demand growth, underutilization/excess capacity will discourage further investment or capital accumulation and the result will of course be stagnation. Let us not address this issue in the manner of the neoclassical economist, who seems to assume that both supply and demand curves can be counted on to perennially shift to the right (absent, of course, undue government interference). But this quaint assumption is belied by the enormous literature on the development and indispensability to capitalism of the marketing and advertising industries, which we might view as massive efforts to counteract Keynes's declining marginal propensity to consume by deliberately creating among the consuming masses a full panoply of "manufactured" consumption desires. These considerations point to the need constantly to exogenously stimulate consumption demand in order to narrow the demand gap generated by the tendency to overaccumulation. But they do not yet establish the need to generate a broad, nation-wide pattern of demand required by structural change and transformational growth.

What is needed at this point are concrete examples of the generators of transformational growth, and of exactly how these generators accomplish one of the fundamental features of transformational growth, the mobilization and coordination of the economic resources of the entire country into a grand national project which stimulates demand not merely for this and that consumption good, but for crucial commodities and institutions such as oil, steel rubber, and other primary products, and communication and transportation facilities. What this requires are what Paul Baran and Paul Sweezy termed, in their influential Monopoly Capital (Monthly Review Press, 1966), "epoch-making innovations". Edward Nell and Robert Heilbroner have characterized these same innovations as "transformative innovations". Let me approach transformative innovations by looking at the tendency to stagnation from yet another perspective, one which focuses on the role of competition as a major force behind the growth of both investment and consumption.

Competition reduces the need for investment by tending to increase both productivity and savings. Let us see how this happens. As a result of competition business is under continuous pressure to cut costs and produce more efficiently. To the extent that business succeeds in these respects, productive potential is increased. At the same time, competition also requires business to hold down wages and salaries and to pay out dividend and profit income relatively sparingly. Together, these pressures hold back both worker and capitalist consumption. The result is a tendency for productive capacity to expand faster than consumption. This means that there is no reason for investment to grow, for capital to achieve the required rate of accumulation, unless there are major pressures transforming the way people live. In the absence of such pressures, we may expect stagnation.

There are two dimensions of transformative innovations which are in fact two aspects of the same phenomenon. One dimension is solely technological, and the other points to changes in a population's entire way of life. Neither of these is part of a process of steady, balloon-like growth, nor is either automatically, or normally, generated by the fundamental capitalist dynamics identified by the mainstream textbooks. For this reason I have called the stimulus imparted by these innovations 'exogenous'. Let us look first at the technological dimension of transformative innovation.

This can be identified, after the owl of Minerva has spread its wings, by reflecting on some of the requirements of ideal-typical capitalism. Neoliberals correctly remind us that the bottom line is of course "freedom", primarily the freedom of capital to roam the world seeking markets, sources of cheap labor and investment opportunities. Microecenomic textbooks in fact tend to assume the perfect mobility of both capital and labor.

Let us focus on sources of power, which became especially important after the industrial revolution. Technological development resulted in the virtually total replacement of human and animal muscle power by inanimate sources of power, mainly water and steam. But reliance on water as a source of power places extreme limits on the mobility of capital, and hence on the possibilities of capitalist growth. Water power is site-specific, and the number of rivers and streams is limited. Moreover, the water had to be fast-running and productive facilities had to be located as far downstream as possible. And of course water power is only seasonally available. These restraints alone place an intolerable obstacle to the free and ongoing accumulation of capital. Here we find an overwhelming incentive to switch from water to steam power. This constitutes a huge stimulus to the accumulation of capital on a national scale.

Capitalism requires sources of power that are independent of nature and can be applied constantly wherever they are needed. And these are precisely what steam power made possible. It was now possible to set up productive facilities virtually anywhere; a major fetter to the accumulation of capital was removed. The universal mobility required by capital was now much more fully realized. At this point I want to emphasize that this technological /economic transformation was necessarily accompanied by profound social and cultural changes. For the steam engine's reduction of the seasonality of water power made possible a feature of work that is increasingly common on a global scale: the emergence of modern year-round work habits. With this change comes a dramatic transformation of our notions (and practices) of work and leisure, with all the consequences these have for the felt experience of everyday life. That is an instance of the second dimension of transformative innovation, i.e. its introduction of dramatic cultural changes, changes in the way populations live.

Much the same can be said for the subsequent shift to electrical power, which makes possible trolley cars, refrigerators (as opposed to what used to be called, in the U.S., "ice boxes"), ranges, toasters, radios, washing machines, fans, et al.

The railroad too is a transformative innovation par excellence. Consider the spectacular effects of railroad expansion: internal transport costs are sharply reduced; both new products and new geographical areas are brought into commercial markets; it is now possible to deliver exports to port with unprecedented efficiency, thereby encouraging the extensive development of the export sector; and impetus is provided to the development of the coal, iron and engineering industries. As with the steam engine, these technological and economic benefits wee necessarily accompanied by profound social and cultural changes. The railroads changed the way of life of the people by binding them as never before. The possibility now existed for mass production, mass consumption and indeed mass culture.

And of course the establishment of a national rail network absorbed massive amounts of investible capital, thereby spurring sustainable growth and offsetting the realization of the economic law that capitalist economies tend to stagnate. Apropos: in the latter third of the nineteenth century, railroad investment in the U.S. amounted to more than all investment in manufacturing industries.

And who can doubt that the transformative effects of the introduction of the automobile were epoch-making? The expansion of the automobile industry was the single most important force in the economic expansion of the 1920s. Car production increased threefold during this decade. (The automobile industry produced 12.7% of all manufactured output, employed 7.1% of all manufacturing workers, and paid 8.7% of all industrial wages.) Immediately after World War II the auto industry continued what was to be its breakneck expansion, and the possibilities created thereby constituted what was perhaps the most extensive transformation of the country's way of life in its history.

Consider the stimulus to capital accumulation and employment constituted by the following, each and all a consequence of the increasing automobilization of American society and culture: the migration of the population from the central city to the suburbs and exurbs (first made possible by the streetcar, before the major streetcar operations were bough and then quickly dismantled by the auto companies); the need for surfaced roads, road construction and maintenance, highway construction and maintenance (which had already accounted for 2% of GDP in 1929); the suburbanization of America, with the attendant construction of housing, schools, hospitals, workplaces, and more; the growth of shopping malls; the expansion of the credit industry; the spread of hotels and motels; and of course the growth of the tourism/travel industry. Never before had any population's way of living been transformed so profoundly in so short a period of time. And of course no one has failed to recognize that Americans' main symbol of their most precious possession, their personal freedom/liberty, is their ability to drive, solo, cars that have increasingly come to resemble tanks. Americans' liberty, embodied in the automobile, has become, literally, a commodity.

The long-term growth of the U.S. economy cannot be adequately explained or described without reference to these transformative innovations. None of these are required by the models of capital accumulation found in neoclassical, Keynesian or Marxian growth theory. After the civil war, growth in the last third of the nineteenth century was spurred primarily by the railroads. This stimulus fizzled, as railroad expansion began to slow down, around 1907, when, in spite of extensive electrification of urban (and even some rural) areas, the U.S. economy began a stretch of slow growth, which lasted until the outbreak of World War I. After the end of the War, the economy experienced a brief slump, which was followed by a period of fairly sustained expansion in the 1920s. The latter, as we have seen, was spurred mainly by the growth of the automobile industry. But the rate of growth of the automobile industry slowed down after 1926, and with it the rate of growth of almost all other manufacturing industries. And wages and employment had not risen as rapidly as production, productivity or profits.

In fact, the economic situation in the U.S. at the end of the 1920s bore a remarkable resemblance to the current economic situation in America. After 1926 overcapacity emerged in many key industries, the most significant of these being automobiles, textiles, and residential construction. Contractionary forces are cumulative: excess capacity caused business confidence to decline, with resulting cutbacks in spending on productive capacity in the consumer durables and capital goods industries. The economy was intensely unsound at the end of the 1920s, and the indications at the time were clear. Consumer demand was held down by a steadily growing inequality of income. Thus, an increasing percentage of total purchases were financed by credit in order to foster purchases of consumer durables. About seventy-five percent of all cars were sold on credit. Accordingly, both home mortgages and installment debt grew rapidly. This was the extension of a trend that had begun as early as 1922, when total personal debt began rising faster than disposable income. Thus, underconsumption and traces of excess capacity, key indicators of stagnationist forces, were in effect from the very beginning of the "roaring '20s". These tendencies became increasingly foregrounded over the course of the decade.

Excess capacity in key manufacturing industries was displacing workers from capital-intensive, technologically advanced sectors to industries relatively devoid of technological advance, i.e. service industries such as trade, finance and government. With capital unable to find sufficiently profitable investment opportunities in high-productivity industries, rampant speculative activity ensued, fostered by the growing concentration of income and therefore savings during the decade. More than two thirds of all personal savings was held by slightly over two percent of all families. The wanton optimism of the 1920s led those with substantial savings to want to get richer quickly, and with little effort. The stock market bubble that materialized at the end of the decade seemed to justify the expectations that fortunes could be made overnight in real estate and the stock market. When investors acted on these expectations, the existing bubble became bigger and hence more fragile. To those familiar with the current state of the U.S. economy, the present situation presents itself as history repeating itself -contra Marx- yet again as farce.

FROM GREAT DEPRESSION TO GOLDEN AGE TO NEOLIBERALISM

The mounting instabilities of the economy of the 1920s led to a Depression that was unresponsive to the Roosevelt administration's elevenfold increase in government spending. When U.S. entry into World War II finally brought about a resumption of growth, there was nonetheless an abiding fear among economists that once War spending ceased, the forces and tendencies that had generated the Depression might reassert themselves and exceptionally slow growth could resume. Instead, much to the surprise of many economists, American capitalism began the most sustained period of expansion in its entire history. The period from 1947 to 1973 has come to be called "The Golden Age", and appears, on the face of it, to be a fatal anomaly with respect to secular stagnation theory. After all, if the causes of the Great Depression were structural, and the exogenous stimulus provided by the War was what produced a resumption of growth, how was it possible that the economy, in the absence of powerful exogenous stimulus, exhibited an historically unprecedented period of long-term growth?

I have suggested that sustained national (as opposed to intra-national regional) growth has been engendered by the emergence of transformative innovations, and it is this kind of consideration that I believe offers the most plausible explanation both of Golden-Age expansion and of the petering out of this growth period and the resumption of (global) stagnation. Five stimuli to long-term growth were set in motion after the War, and these were for the most part exogenous in the sense indicated, and essentially limited. I will construe these stimuli as forces counteracting the tendency to stagnation. Once most of these stimuli had spent their potential, stagnationist tendencies re-asserted themselves, and overinvestment became evident once again. With profitable industrial investment opportunities in short supply, the economic surplus was invested instead in what became a vast proliferation of financial instruments. When the bubble created by this process finally burst, it was replaced with a housing bubble. Indeed a variety of bubbles, in financial assets, in housing, in credit, and a substantially overvalued dollar now threaten an historically unparalleled reassertion of the tendency to stagnation. But let us look first at the counteracting forces.

After the War, and as a result of wartime rationing, Americans had accumulated a very large fund of savings, and the time had come when these could finally be spent. This accounted for an immediate surge of consumption spending which temporarily averted the onset of recession. But the effectiveness of this source of spending was soon spent. What truly impelled the sustained growth of the Golden Age was 1) the resumption of a vast expansion of the automobile industry, and with it the stimulation of the broad range of investment and employment opportunities discussed above in connection with automobilization; 2) large-scale economic aid to Europe, which stimulated export demand; 3) a nationwide process of suburbanization, which, in tandem with the expansion of auto production, expanded significantly the demand for the output of every other major industry; 4) the emergence of what president Eisenhower christened the "military-industrial" complex, which provided additional stimulus to the industries most vulnerable to economic instability, the industries of DI, the capital goods sector; and finally 5) the steady and growing expansion of business and especially consumer credit, which in recent years has assumed elephantine proportions.

Three of these factors bear the two most important features of epoch-making innovations. The expansion of the auto industry, suburbanization, and the ever-increasing expansion and extension of credit all absorb massive amounts of investible surplus, and transform the mode of life of the entire population. In so doing they impart a massive push to the macro-growth process. The first two of these have their initial direct effect on investment. The third factor, the growing importance of credit, affects both investment and consumption, but the long-term trend of the credit industry in the U.S., evident now in hindsight, is much more significant in relation to consumption. There is now in the States a credit bubble of menacing proportions, with consumers now in debt to the tune of about107% of disposable income. The Marshall Plan (number 2 above) affected mainly and directly investment and employment, with boosts to consumption following thereupon. By the mid- to late-1970s, the employment-generating capacity of the military had declined. Washington determined, in the light of the defeat in Vietnam, that hi-tech warfare, which is of course technology- rather than labor-intensive, must replace traditional forms of subversion and aggression, in order to render less likely a repeat of the "Vietnam Syndrome."

It is worth mentioning that the military-industrial complex and the vast extension of consumer credit were what constituted what Joan Robinson called "bastard Keynesianism" in the United States. Recall that Keynes had insisted that fiscal and monetary policy were necessary but not sufficient conditions for avoiding stagnation. The tendency to stagnation could be offset for the long run only if some key industries were nationalized, and income redistributed. Nationalization would allow the State to offset lagging demand by providing cheap inputs to the private sector, thereby enabling lower prices. And redistributing income would transfer liquidity from those who had more than they could either consume or invest to those whose consumption demand was severely constrained.

American policymakers saw it as their challenge to reap the effects of nationalization and redistribution without actually nationalizing industries or redistributing income. The solution was ingenious: the military-industrial complex would be the functional equivalent of state-owned industries, and would, as noted above, stimulate the demand for the output of those very firms that produced capital goods. And the extension of consumer credit would allow working people to mortgage future years' incomes and spend more without a corresponding increase in either their private or their social wage.

As mentioned earlier, these forces counteracting the tendency to stagnation were all inherently limited and temporary. By the late 1960s, the automobile industry had achieved maturity, suburbanization had been accomplished, and aid to Europe had not only long ended, but had apparently created for America the economic equivalent of Frankenstein's monster. Europe and Japan were now formidable threats to U.S. economic hegemony. (Germany, for example, has overtaken the U.S. as an exporter of capital goods.) These three colossal absorbers of surplus were now no longer in operation. In the mid-1960s social spending had overtaken military spending as the larger share of government spending. And credit had begun to function as a supplement to declining real income, rather than a further addition to growing income.

These combined developments rendered the post-War counters to the realization of the tendency to stagnation obsolete. The result was the onset of stagnation not only in the U.S. but also worldwide. In America there has been overcapacity in autos, steel, shipbuilding and petrochemicals since the mid- to late-1970s.

This general picture is widely reflected in the business press. Business Week noted that "..supply outpaces demand everywhere, sending prices lower, eroding corporate profits and increasing layoffs" (Jan. 25, 1999, p. 118). The former chairman of General Electric claimed that "..there is excess capacity in almost every industry" (The New York Times, Nov. 16, 1997, p. 3). The Wall Street Journal noted that "..from cashmere to blue jeans, silver jewelry to aluminum cans, the world is in oversupply" (Nov. 30, 1998, p. A17). And The Economist fretted that " the gap between sales and capacity is "at its widest since the 1930s" (Feb. 20, 1999, p. 15). At this time excess capacity in steel is exceeding twenty percent, in autos it has fluctuated around 30%. And these figures look good in comparison to unused capacity numbers in the "industries of the future" of the "New Economy", semiconductors and telecommunications. Not long ago, ninety-seven percent of fibre optic capacity was idle.

MAINSTREAM ECONOMICS AND STAGNATION THEORY

Let us begin with the indisputable fact that the regime of neoliberalism has brought with it a substantial decline in economic growth. The most widely cited study on this issue, produced for the IECD by Angus Maddison, shows that the annual rate of growth of real global GDP fell from 4.9% in 1950-1973 to 3 % in 1973-1998, a drop of 39 %. Theoretical commitments can guide perception: neoliberal economists either denied or ignored the decline in global growth because of their reliance on Say's Law, that it is not possible for total demand to fall below full-capacity supply over the long run. In my earlier remarks I offered an explanation of sluggish growth rates since 1973. Many orthodox economics have done something similar: they have offered explanations of the initial rise in excess capacity. But what has not been explained is why global supply did not eventually adjust itself to the slower rate of demand growth, with the result that in the mid-1970s the global economy would enter a period of sluggish expansion. And it is worth mentioning that even Keynesian macro-theory is inadequate in this regard. It assumes that slow growth in aggregate demand will result in a proportionate decline in the growth of aggregate supply through its effect upon investment and therefore productivity.

An adequate explanation of the sustained character of excess capacity can be constructed from insights from Schumpeter, Marx and the contemporary economist James Crotty. The analysis that follows should be understood within the framework of the version of secular stagnation theory sketched above.

Before the shift to neoliberal policies by Jimmy Carter, Reagan and Thatcher, the global economy was already subject to downward pressures on demand growth resulting from two oil price shocks and the restrictive macro policy imposed in response to oil-price induced inflation. These impediments to demand growth were exacerbated by neoliberal policies. In combination, these forces led to a sharp rise in excess capacity in globally competing industries. At the same time competitive pressures were further intensified by the reduction of the market power of national oligopolies caused by the removal of protectionist barriers to the free movement of goods and money across national boundaries. Accordingly, competitive pressures between nations rose dramatically. In this context, normal stagnationist tendencies operated to further constrain global demand growth and further reproduce industrial capacity faster than either neoclassical or Keynesian theory could comprehend.

The Achilles Heel of neoclassical theory with respect to its inability to account for the persistence of overcapacity during the neoliberal period is its account of competition. So-called "perfect competition" is alleged to lead to maximum efficiency and the elimination of excess capacity. This claim appears inconsistent with the history of real-world, pre- and post-oligopolistic competition. Textbook-like competition has led to periodic market gluts or overproduction crises, price wars, plummeting profits, unbearable debt burdens and violent labor relations. Neoclassical theory banishes these demons with the aid of two assumptions which appear designed explicitly to make them impossible. The first assumption claims that production cost per unit rises rapidly as output increases, and the second that exit from low-profit industries is free or costless. If these assumptions were indeed true, then pure competition could not be shown to have stagnation- or depression-inducing effects. But these assumptions are, I shall suggest, false.

I will begin with the least plausible of these two assumptions. It states that there is free or costless exit from low-profit industries. But productive assets are typically immobile or irreversible, i.e., they are not liquid, and this forces a sizeable loss in the value of a firm's capital should it choose to leave an unprofitable industry. Whether they are sold on a second-hand market or reallocated to a different industry, productive assets will lose substantial value. Capital flowing out of the aerospace industry has been found to sell for one third of its replacement cost. Insolvent telecom firms in the U.S. have sold their assets for 20 cents on the dollar. And isn't this what one would expect? For it is usually poor profit prospects and/or great excess capacity that heighten a firm's incentive to leave an industry. But it is precisely those circumstances which deeply depress the price of industry-specific assets on the second-hand market, since the supply of these assets grows even as the demand for them has collapsed.

Before I turn to the slightly more plausible (yet still false) assumption -that unit production cost rises dramatically as output increases- I will outline the corollary of neoclassical theory itself which neoclassical economists seek to evade by introducing this assumption. The theory tells us that pure competition will force price down until it covers marginal cost. Now if unit production cost remained constant irrespective of the output level, then marginal production cost and average production cost per unit would be equal. When perfect competition forces price to equal marginal cost, total revenue will be equal to total production cost. But in this case there will be no revenue left over either to pay the "fixed" cost of maintaining capital stock in the face of depreciation or obsolescence, or to pay interest and/or dividends to investors. Thus, perfect competition is seen to cause the representative firm to suffer, in each production period, a loss that is equal to fixed costs. Keeping in mind that most important global industries have huge fixed costs, no industry could long survive the consequences of intense competition.

We seem to have found a tendency to stagnation or complete system breakdown where we would least expect to find it - in neoclassical theory itself. But the theory claims to have a response to this embarrassment. It simply denies the claim that appears to entail the undesired consequence, namely the claim that unit production cost remains constant no matter what the output level. Armed now with the (false) assumption that unit production cost rises rapidly as production increases, the conclusion is drawn that marginal cost and price are greater than average unit production cost. Thus, in equilibrium, the gap between price and average production cost is sufficiently large to cover all fixed costs. Let competition be as fierce as you wish, the typical firm will not lose money. Voila!

I have claimed that each of the rescuing assumptions discussed above is false. What would realistic assumptions about marginal cost and the reversibility of invested capital look like? To answer this question we must recognize the distinctive character of the dominant industries of global trade and investment. These industries include steel, autos, aircraft, shipbuilding, petrochemicals, consumer durables, electronics, semiconductors and banking. Studies of this type of industry suggest that marginal cost does not typically rise with output, with the rare exception of cases when the industry is producing near full capacity output. Marginal cost behaves as we would expect in cases of economies of scale: it remains constant or declines as capacity utilization rises. It follows that if free competition forces price to equal marginal cost in these industries, we should count on an ensuing wave of bankruptcies. Here again we see that neoclassical theory, corrected for unrealistic assumptions, seems to commit us to conceptualize mature capitalism as subject to the law of an inherent tendency to stagnation or worse.

The issue I am focusing on here turns on the dynamics of unrestricted competition among oligopolies in the context of economies of scale. The importance of economies of scale underscores the crucial similarity of all the dominant industries, including the new information-technology and telecommunications (ITC) industries. I stress this point because influential neoclassical economists have wanted to claim a significant difference, with respect to overcapacity problems, between the ITC industries and the other dominant industries. For purposes of explaining the persistence of excess capacity under neoliberalism, we want to remember that as scale economies grow, marginal costs fall as fixed costs per unit rise. Thus, the greater the economies of scale, the more destructive becomes the marginal cost pricing required by intense competition. With this in mind, we can more easily see that 1) these dynamics in especially conspicuous operation in the ITC industries, and 2) that such differences as there are between ITC and the other dominant oligopolies are insignificant for the analysis of secular stagnation theory, and of capitalist growth in general.

The key issue right now, recall, is the highly destructive consequences of the tendency of free competition among dominant industries to force price to equal marginal cost. That this is the case is easier to see in the ITC sector than in the other dominant industries. This is because in ITC marginal cost is often close to zero. Producing another copy of software or adding another customer to eBay is virtually costless. This has led many mainstream economists to argue that ITC industries are exempt from the laws of the neoclassical theory of perfect competition. Since ITC firms have marginal costs much lower than their large fixed costs, the argument goes, the possession of at least temporary monopoly power is the only guarantee of an incentive to produce anything at all. Without monopoly pricing power prices will be competed down to marginal cost and fixed costs will be unable to be covered. Thus, the motor of the "new economy" is said to be the constant pursuit of monopoly power. But, contrary to the neoclassical claim, none of this distinguishes significantly between ITC and other key industries. The drive to monopoly power is characteristic of all large corporations in the present age.

As Paul Sweezy argued in his Marshall Lectures, the typical firm in an oligopolized industry strives to be a monopolist. Each firm does this individually, and they all do it collectively. Individual firms seek monopoly status through the sales effort, where the firm's product is put forth as the best in the industry and as different from all the others. Firms within the same industry seek to approach monopoly status by collusion with respect to pricing policy, especially by agreeing to refrain from cutthroat price competition. For reasons developed at length above, therefore, all dominant firms, whether old- or new-economy operations, will tend to achieve monopoly status and to be chronically saddled with excess capacity.

A SCANDALOUSLY BRIEF LOOK AT SLOW-GROWTH CAPITALISM

We are in the midst of another unparalleled period of historical capitalism. Since the onset of stagnation, the median wage in the States has not changed at all for the vast majority of wage workers. Over the past six quarters the gowth of wage income has been negative. A brief sketch of the state of the U.S. economy toward the end of last year highlights features whose most plausible explanation may lie in the fact of secular stagnation. If stagnation theory is accurate, what follows is precisely what we would expect to find. The current state of the U.S. and the global economy is best understood, I believe, against the background too briefly elaborated above. Here is a picture of the U.S. economy today. The key to a healthy economy is job- and income-creating investment in capital goods, which in turn generates a virtuous cycle of further growth in investment, jobs and income. Ominously, the investment, growth, employment and income pictures are unprecedentedly dismal.

Compared to cyclical recoveries between 1949 and 1973, recoveries during the neoliberal period have been weak. Indeed, one or two of the post-1973 upturns has been weaker than some downturns during the Golden Age. Since the stock market collapse of four years ago, the situation has worsened. Growth rates since 2000 have been half their previous average. Even this weak performance required historically unprecedented fiscal and monetary stimulus: 13 rate cuts, three tax cuts, massive government deficits and record growth in money and credit.

Official figures mask the economy's most serious problems. Growth figures are annualized by U.S. statisticians. Thus, the much-touted 7.1% growth rate in the third quarter of 2003 was the one that would emerge after twelve months if the current trend were to continue. The same growth rate would have been reported in the eurozone as 1.8%. This is an uncommonly weak performance.

Investment data are equally misleading. Since the mid-1990s the Bureau of Economic Analysis (BEA) has adjusted upward actual business dollar outlays on computers and related equipment to take into account quality improvements (faster processors, bigger hard drives, more memory). BEA calls this "hedonic adjustment." Accordingly, the BEA estimates that business high-tech investment quadrupled between 1996 and 2002, from $70.9 to $283.7. But in actual dollars spent, the increase was only from $70.9 billion to $74.2 billion, very low by historic standards. The high-tech boom was both greatly exaggerated and misleading. After all, neither profits nor wages are taken in "hedonically adjusted" dollars.

The difference between real and hedonic outlays explains what would otherwise be a paradoxical feature of the years 2000-2003: government was reporting big increases in high-tech investment, while manufacturers were bemoaning declining sales.

Hedonic pricing has accounted for a steadily rising percentage of all reported capital investment. But if we look at actual dollars spent, we find that since 1998 the growth rate of business fixed investment has actually been declining. Real capital investment has in fact not been this weak since the Great Depression.

The fudging of investment figures also obscures the sorry state of the jobs market. The Commerce Department's figures on nonresidential investment for the third and fourth quarters of 2003 reported increases of, respectively, 12.8 and 9.6%. A closer look reveals that the "adjusted" hi-tech sector is the only bright spot, with production and capacity rising, respectively, 24.6% and 11.1% over the past year. But hi-tech is not where significant jobs increases are found. Employment in hi-tech has declined steadily through the so-called "recovery" since its 2001 peak.

In non-hi-tech manufacturing, where investment figures are not adjusted, production from January 2003 to January 2004 rose only 0.9%, while capacity actually declined -0.2%. This represents a record nineteen-straight-month decline in mainline manufacturing capacity. Since it is mainline manufacturing which employs almost 95% of all manufacturing workers, it comes as no surprise that for the first time since the Great Depression the economy has gone more than three years without creating any jobs.

The jobs crisis is even worse than it appears. Here again statistical sleight-of-hand, this time by the Bureau of Labor Statistics (BLS), obscures economic reality. Based on data gathered employing the "net birth/death adjustment," BLS announced in April, 2004, that the long-awaited jobs recovery had finally arrived. Nonfarm payrolls had allegedly surged by a whopping 308,000 in March, 2004. The birth/death model uses business deaths to "impute" employment from business births. Thus, as more businesses fail, more new jobs are imputed to have materialized through business births. This improbable statistical artefact accounts for about half of the reported 308,000 March, 2004 payroll increase.

The birth/death model is based on statistics covering 1998-2002. This was a period of explosive telecom and dot.com startups, quite unlike today's flat economic landscape. Thus, two thirds of the 947,000 new jobs BLS "imputed" for March-May, 2004, were never actually counted by BLS and never reported by any firm.

BlS's household and establishment surveys tell a more sobering story. March employment by private industry actually fell by 175,000, and the number of self-employed workers declined by 288,000. Without the simultaneous increase of 439,000 government jobs, the March job announcement would have been a calamity. And both average weekly hours and total hours worked declined markedly, even as (according to the dubious birth/death findings) the work force increased. This is the first time in U.S. history that net job growth has been negative 26 months into a recovery.

The wage and salary picture has also set grim records. During the current recovery, wage and salary growth has actually been negative, at -0.6%, in contrast to the average increase of 7.2% characteristic of this point into each of the other eight post-War recoveries. In fact, median family income in the post-War period exhibits an ominous trend. From 1947 to 1967, real median family income rose by 75%. But since 1967, it has grown by only 30%.

Labor's losses have been capital's gain: since the peak of the last recovery, in the first quarter of 2001, corporate profits have risen 62.2%, compared to the average of 13.9% at the same point in the last eight recoveries. Never in American history has any recorded recovery had such a lopsided balance in the distribution of income gains between labor and capital.

Given the dismal investment, wage/salary and employment pictures, how has it been possible for consumption to have risen to 71% of GDP in the early nineties, from its prior post-War average of 66%? The answer is a growth rate of consumer debt never seen before in America. For the first time ever, in March 2001, overall debt levels (mortgage debt plus consumer debt, mainly credit card debt and car loans) rose above annual disposable income. And from 2001 to 2004 consumer debt rose from 101% to 116% of disposable income. In the first half of 2004, consumer borrowing has been at its highest ever. It has declined slightly in the meantime. So has consumer spending. Should Americans decide to significantly increase their saving and service debts, while lowering correspondingly their consumption expenditures, the global economy could experience a major disruption.

Up until very recently, consumers had stepped up their borrowing to compensate for slowing income growth. Thus, such growth as the U.S. has experienced in recent years has been almost entirely consumption- and debt-driven. More fundamentally, it has been bubble-driven, fueled principally by bubbles in home values and credit.

Since the collapse of stock market/hi-tech bubbles in 2001, the illusory "wealth effect" has been sustained, and consumer spending thereby encouraged, by another bubble, the enormous inflation of house prices. The biggest increase in household debt came from home mortgage debt, especially home mortgage refinancing. With mortgage rates low and home prices rising, households' home equity ballooned. Bloated home equity then provided rising collateral to underwrite still more borrowing.

What makes this especially problematic is that over the last ten years, the average family has suffered under large increases in health premiums, housing costs, tuition fees and child care costs. As a result, households' and individuals' margin of protection against insolvency has dramatically declined. Filings for personal bankruptcy are approaching a record high.

There are indications that these weaknesses and imbalances in the economy are reaching a critical mass. The mortgage refi boom has fizzled, and consumer spending is beginning to decline. Two years ago the Fed's quarterly Beige Book reported a disturbing shift in the composition of credit spending: more and more families are using their credit cards to finance spending on essentials, such as food and energy.

It is no exaggeration to say that both the U.S. economy and the global economy are hugely dependent on the American consumer's increasing willingness to spend more than (s)he makes. (Imported goods have been a rising proportion of all goods purchased here.) Thus, a decline in U.S. consumer spending portends further declines in investment, jobs and income. From January to July of 2004, consumer spending rose at an annual rate of 2.8%, down from 3.3% in 2003 and 3.1 % in 2002. For perspective, during the boom years 1999-2000, growth rates were 5.1% and 4.7%.

Spending on consumer durables is the most significant indicator of healthy growth, and the drastically lower spending in this area is cause for alarm: spending for consumer durables was down to $23.5 billion in the first seven months of this year, in contrast to $71 billion on 2003 and $58 billion in 2002.

Should consumer spending continue to decline, the economy faces the genuine likelihood of a severe recession. Of course not a single American politician addresses this issue.

What is required is a shift from bubble-, debt-, and consumption-driven growth to investment- and income-driven growth. This in turn necessitates a decline in Americas principal export, jobs. Domestic job growth, a higher minimum wage, tax cuts aimed predominantly at low- and middle-income families, a sharp reduction in defense spending and a redirection of these funds to long-neglected and pressing social needs such as health care reform, the provision of universal pre-school, and across-the-board repair and upgrading of America's deteriorated infrastructure of roads, highways,tunnels and bridges, all these should be at the forefront of a Democratic administration's agenda. The restoration of infrastructure is especially labor intensive, and would generate an enormous number of productive jobs. And as a national project spearheaded by government initiative, government would emerge as a major employer.

All this si entirely incompatible with the overwhelming neoliberal bent of even the most "liberal" political leaders. It was after all Bill Clinton who urinated on the grave of Franklin Roosevelt when he proclaimed "the end of welfare as we know it".

As unfashionable as it is to suggest such a thing at a conference of economists, the only hope for the world's majority seems to be the revival of the kinds of mass movements witnessed here in May of 1968, and throughout the world during the 1960s. And time may be short.

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Alan Nasser is Professor emeritus of Political Economy and Philosophy at The Evergreen State College. His book, The “New Normal”: Persistent Austerity, Declining Democracy and the Globalization of Resistance will be published by Pluto Press in 2013. If you would like to be notified when the book is released, please send a request to nassera@evergreen.edu

Thomas Palley » Blog Archive » Explaining Stagnation Why it Matters

John Bellamy Foster and Fred Magdoff clearly identify stagnation in their 2009 book The Great Financial Crisis: Causes and Consequences (HERE). They conclude with a section titled “Back to the real economy: the stagnation problem” and they write:

“It was the reality of economic stagnation beginning in the 1970s, as heterodox economists Ricardo Belliofiore and Joseph Halevi have recently emphasized, that led to the emergence of “the new financialized capitalist regime,” a kind of “paradoxical financial Keynesianiasm” whereby demand in the economy was stimulated primarily “thanks to asset-bubbles” (Foster and Magdoff, p.129).”

My own 2009 New America Foundation report, “America’s Exhausted Paradigm: Macroeconomic Causes of the Financial Crisis and Great Recession”, concluded (HERE):

“The bottom line is macroeconomic failure rooted in America’s flawed economic paradigm is the ultimate cause of the financial crisis and Great Recession…. Now, there is a grave danger that policymakers only focus on financial market reform and ignore reform of America’s flawed economic paradigm. In that event, though the economy may stabilize, it will likely be unable to escape the pull of economic stagnation. That is because stagnation is the logical next stage of the existing paradigm.”

That report became a core chapter in my 2012 book, From Financial Crisis to Stagnation, the blurb for which reads (HERE):

“The U.S. economy today is confronted with the prospect of extended stagnation. This book explores why…. Financial deregulation and the house price bubble kept the economy going by making ever more credit available. As the economy cannibalized itself by undercutting income distribution and accumulating debt, it needed larger speculative bubbles to grow. That process ended when the housing bubble burst. The earlier post–World War II economic model based on rising middle-class incomes has been dismantled, while the new neoliberal model has imploded. Absent a change of policy paradigm, the logical next step is stagnation. The political challenge we face now is how to achieve paradigm change.”

The big analytical difference between Foster and Magdoff and myself is that they see stagnation as inherent to capitalism whereas I see it as the product of neoliberal economic policy. Foster and Magdoff partake of the Baran-Sweezy tradition that recommends deeper socialist transformation. I use a structural Keynesian framework that recommends reconstructing the income and demand generation mechanism via policies that include rebuilding worker bargaining power, reforming globalization, and reining in corporations and financial markets.

Larry Summers’ story of serial bubbles delaying stagnation has substantial similarities with both accounts but he avoids blaming either capitalism or neoliberalism. That is hardly surprising as Summers has been a chief architect of the neoliberal system and remains committed to it, though he now wants to soften its impact. Instead, he appeals to the black box of “secular stagnation” as ultimate cause and suggests fiscal policies that would ameliorate the demand shortage problem. However, those policies would not remedy the root cause of stagnation as they leave the economic architecture unchanged.

Though Summers and Krugman are relative late-comers to the stagnation hypothesis, they have still done a great public service by drawing attention to it. Now that stagnation has been identified, the real debate can begin.

The questions are what caused stagnation and what must be done to restore shared prosperity? There is no guarantee we will answer those questions correctly (my prior is mainstream economists will continue their track record of getting it wrong). But it is absolutely certain we will not get the right answer if we do not ask the right question. So thank you Larry Summers and Paul Krugman for putting stagnation on the table. Let the debate begin.

This entry was posted on Monday, February 24th, 2014 at 12:53 pm and is filed under Economics, U.S. Policy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Summers makes the idea of secular stagnation mainstream

Larry Summers (“Why Stagnation May Prove To Be The New Normal,” The Financial Times, December 15, 2013)  suggested the current "lack of demand" is not anomaly but a feature of the current sociao-economic system.  He suggested that we have been in the throes of stagnation for a long while, but that has been obscured by years of serial asset price bubbles. His article produced great public debate and marked the point when the idea became mainstream. The debate began with Summers’ speech to the IMF’s Fourteenth Annual Research Conference in Honor of Stanley Fisher. Summers noted that the panic of 2008 was “an event that in the fall of 2008 and winter of 2009 … appeared, by most of the statistics—GDP, industrial production, employment, world trade, the stock market—worse than the fall of 1929 and the winter of 1930. …”

Tha means the major defeat for “stabilization policies” that were supposed to smooth the capitalist industrial cycle and abolish panics. And the problem preceeds the 2008 panic itself.

The highly misleading unemployment rate calculated by the U.S. Department of Labor notwithstanding, there has been a massive growth in long-term unemployment in the U.S. in the wake of the crisis, as shown by the declining percentage of the U.S. population actually working.

The current situation also refute the key tenet of neoclassical economy (which is pseudo-religious doctrine, so that only increase fanatic devotion of its well-paid adherents). Neoclassical economists insisted that since a “free market economy” naturally tends toward an equilibrium with full employment of both workers and machines, the economy should should quickly return to “full employment” after a recession. This is not the case. See also Secular Stagnation Lawrence H. Summers

There were several uncessful attempts to explaint his situation from neoclassical positions. In Secular Stagnation, Coalmines, Bubbles, and Larry Summers - NYTimes.com Paul Krugman  emphasized the liquidity trap – zero lower bound to interest rates which supposedly prevents spending from reaching a level sufficient for full employment.

Larry’s formulation of our current economic situation is the same as my own. Although he doesn’t use the words “liquidity trap”, he works from the understanding that we are an economy in which monetary policy is de facto constrained by the zero lower bound (even if you think central banks could be doing more), and that this corresponds to a situation in which the “natural” rate of interest – the rate at which desired savings and desired investment would be equal at full employment – is negative.

And as he also notes, in this situation the normal rules of economic policy don’t apply. As I like to put it, virtue becomes vice and prudence becomes folly. Saving hurts the economy – it even hurts investment, thanks to the paradox of thrift. Fixating on debt and deficits deepens the depression. And so on down the line.

This is the kind of environment in which Keynes’s hypothetical policy of burying currency in coalmines and letting the private sector dig it up – or my version, which involves faking a threat from nonexistent space aliens – becomes a good thing; spending is good, and while productive spending is best, unproductive spending is still better than nothing.

Larry also indirectly states an important corollary: this isn’t just true of public spending. Private spending that is wholly or partially wasteful is also a good thing, unless it somehow stores up trouble for the future. That last bit is an important qualification. But suppose that U.S. corporations, which are currently sitting on a huge hoard of cash, were somehow to become convinced that it would be a great idea to fit out all their employees as cyborgs, with Google Glass and smart wristwatches everywhere. And suppose that three years later they realized that there wasn’t really much payoff to all that spending. Nonetheless, the resulting investment boom would have given us several years of much higher employment, with no real waste, since the resources employed would otherwise have been idle.

OK, this is still mostly standard, although a lot of people hate, just hate, this kind of logic – they want economics to be a morality play, and they don’t care how many people have to suffer in the process.

But now comes the radical part of Larry’s presentation: his suggestion that this may not be a temporary state of affairs.

2. An economy that needs bubbles?

We now know that the economic expansion of 2003-2007 was driven by a bubble. You can say the same about the latter part of the 90s expansion; and you can in fact say the same about the later years of the Reagan expansion, which was driven at that point by runaway thrift institutions and a large bubble in commercial real estate.

So you might be tempted to say that monetary policy has consistently been too loose. After all, haven’t low interest rates been encouraging repeated bubbles?

But as Larry emphasizes, there’s a big problem with the claim that monetary policy has been too loose: where’s the inflation? Where has the overheated economy been visible?

So how can you reconcile repeated bubbles with an economy showing no sign of inflationary pressures? Summers’s answer is that we may be an economy that needs bubbles just to achieve something near full employment – that in the absence of bubbles the economy has a negative natural rate of interest. And this hasn’t just been true since the 2008 financial crisis; it has arguably been true, although perhaps with increasing severity, since the 1980s.

One way to quantify this is, I think, to look at household debt. Here’s the ratio of household debt to GDP since the 50s:

There was a sharp increase in the ratio after World War II, but from a low base, as families moved to the suburbs and all that. Then there were about 25 years of rough stability, from 1960 to around 1985. After that, however, household debt rose rapidly and inexorably, until the crisis struck.

So with all that household borrowing, you might have expected the period 1985-2007 to be one of strong inflationary pressure, high interest rates, or both. In fact, you see neither – this was the era of the Great Moderation, a time of low inflation and generally low interest rates. Without all that increase in household debt, interest rates would presumably have to have been considerably lower – maybe negative. In other words, you can argue that our economy has been trying to get into the liquidity trap for a number of years, and that it only avoided the trap for a while thanks to successive bubbles.

And if that’s how you see things, when looking forward you have to regard the liquidity trap not as an exceptional state of affairs but as the new normal.

3. Secular stagnation?

How did this happen? Larry explicitly invokes the notion of secular stagnation, associated in particular with Alvin Hansen (pdf).  He doesn’t say why this might be happening to us now, but it’s not hard to think of possible reasons.

Back in the day, Hansen stressed demographic factors: he thought slowing population growth would mean low investment demand. Then came the baby boom. But this time around the slowdown is here, and looks real.

Think of it this way: during the period 1960-85, when the U.S. economy seemed able to achieve full employment without bubbles, our labor force grew an average 2.1 percent annually. In part this reflected the maturing of the baby boomers, in part the move of women into the labor force.

This growth made sustaining investment fairly easy: the business of providing Americans with new houses, new offices, and so on easily absorbed a fairly high fraction of GDP.

Now look forward. The Census projects that the population aged 18 to 64 will grow at an annual rate of only 0.2 percent between 2015 and 2025. Unless labor force participation not only stops declining but starts rising rapidly again, this means a slower-growth economy, and thanks to the accelerator effect, lower investment demand.

By the way, in a Samuelson consumption-loan model, the natural rate of interest equals the rate of population growth. Reality is a lot more complicated than that, but I don’t think it’s foolish to guess that the decline in population growth has reduced the natural real rate of interest by something like an equal amount (and to note that Japan’s shrinking working-age population is probably a major factor in its secular stagnation.)

There may be other factors – a Bob Gordonesque decline in innovation, etc.. The point is that it’s not hard to think of reasons why the liquidity trap could be a lot more persistent than anyone currently wants to admit.

4. Destructive virtue

If you take a secular stagnation view seriously, it has some radical implications – and Larry goes there.

Currently, even policymakers who are willing to concede that the liquidity trap makes nonsense of conventional notions of policy prudence are busy preparing for the time when normality returns. This means that they are preoccupied with the idea that they must act now to head off future crises. Yet this crisis isn’t over – and as Larry says, “Most of what would be done under the aegis of preventing a future crisis would be counterproductive.”

He goes on to say that the officially respectable policy agenda involves “doing less with monetary policy than was done before and doing less with fiscal policy than was done before,” even though the economy remains deeply depressed. And he says, a bit fuzzily but bravely all the same, that even improved financial regulation is not necessarily a good thing – that it may discourage irresponsible lending and borrowing at a time when more spending of any kind is good for the economy.

Amazing stuff – and if we really are looking at secular stagnation, he’s right.

Of course, the underlying problem in all of this is simply that real interest rates are too high. But, you say, they’re negative – zero nominal rates minus at least some expected inflation. To which the answer is, so? If the market wants a strongly negative real interest rate, we’ll have persistent problems until we find a way to deliver such a rate.

One way to get there would be to reconstruct our whole monetary system – say, eliminate paper money and pay negative interest rates on deposits. Another way would be to take advantage of the next boom – whether it’s a bubble or driven by expansionary fiscal policy – to push inflation substantially higher, and keep it there. Or maybe, possibly, we could go the Krugman 1998/Abe 2013 route of pushing up inflation through the sheer power of self-fulfilling expectations.

Any such suggestions are, of course, met with outrage. How dare anyone suggest that virtuous individuals, people who are prudent and save for the future, face expropriation? How can you suggest steadily eroding their savings either through inflation or through negative interest rates? It’s tyranny!

But in a liquidity trap saving may be a personal virtue, but it’s a social vice. And in an economy facing secular stagnation, this isn’t just a temporary state of affairs, it’s the norm. Assuring people that they can get a positive rate of return on safe assets means promising them something the market doesn’t want to deliver – it’s like farm price supports, except for rentiers.

Oh, and one last point. If we’re going to have persistently negative real interest rates along with at least somewhat positive overall economic growth, the panic over public debt looks even more foolish than people like me have been saying: servicing the debt in the sense of stabilizing the ratio of debt to GDP has no cost, in fact negative cost.

I could go on, but by now I hope you’ve gotten the point. What Larry did at the IMF wasn’t just give an interesting speech. He laid down what amounts to a very radical manifesto. And I very much fear that he may be right.

Supplement 1: Of Flying Cars and the Declining Rate of Profit (reprint)

Of Flying Cars and the Declining Rate of Profit - The Baffler

David Graeber

A secret question hovers over us, a sense of disappointment, a broken promise we were given as children about what our adult world was supposed to be like. I am referring not to the standard false promises that children are always given (about how the world is fair, or how those who work hard shall be rewarded), but to a particular generational promise—given to those who were children in the fifties, sixties, seventies, or eighties—one that was never quite articulated as a promise but rather as a set of assumptions about what our adult world would be like. And since it was never quite promised, now that it has failed to come true, we’re left confused: indignant, but at the same time, embarrassed at our own indignation, ashamed we were ever so silly to believe our elders to begin with.

Where, in short, are the flying cars? Where are the force fields, tractor beams, teleportation pods, antigravity sleds, tricorders, immortality drugs, colonies on Mars, and all the other technological wonders any child growing up in the mid-to-late twentieth century assumed would exist by now? Even those inventions that seemed ready to emerge—like cloning or cryogenics—ended up betraying their lofty promises. What happened to them?

We are well informed of the wonders of computers, as if this is some sort of unanticipated compensation, but, in fact, we haven’t moved even computing to the point of progress that people in the fifties expected we’d have reached by now. We don’t have computers we can have an interesting conversation with, or robots that can walk our dogs or take our clothes to the Laundromat.

As someone who was eight years old at the time of the Apollo moon landing, I remember calculating that I would be thirty-nine in the magic year 2000 and wondering what the world would be like. Did I expect I would be living in such a world of wonders? Of course. Everyone did. Do I feel cheated now? It seemed unlikely that I’d live to see all the things I was reading about in science fiction, but it never occurred to me that I wouldn’t see any of them.

At the turn of the millennium, I was expecting an outpouring of reflections on why we had gotten the future of technology so wrong. Instead, just about all the authoritative voices—both Left and Right—began their reflections from the assumption that we do live in an unprecedented new technological utopia of one sort or another.

The common way of dealing with the uneasy sense that this might not be so is to brush it aside, to insist all the progress that could have happened has happened and to treat anything more as silly. “Oh, you mean all that Jetsons stuff?” I’m asked—as if to say, but that was just for children! Surely, as grown-ups, we understand The Jetsons offered as accurate a view of the future as The Flintstones offered of the Stone Age.

Surely, as grown-ups, we understand The Jetsons offered as accurate a view of the future as The Flintstones did of the Stone Age.

Even in the seventies and eighties, in fact, sober sources such as National Geographic and the Smithsonian were informing children of imminent space stations and expeditions to Mars. Creators of science fiction movies used to come up with concrete dates, often no more than a generation in the future, in which to place their futuristic fantasies. In 1968, Stanley Kubrick felt that a moviegoing audience would find it perfectly natural to assume that only thirty-three years later, in 2001, we would have commercial moon flights, city-like space stations, and computers with human personalities maintaining astronauts in suspended animation while traveling to Jupiter. Video telephony is just about the only new technology from that particular movie that has appeared—and it was technically possible when the movie was showing. 2001 can be seen as a curio, but what about Star Trek? The Star Trek mythos was set in the sixties, too, but the show kept getting revived, leaving audiences for Star Trek Voyager in, say, 2005, to try to figure out what to make of the fact that according to the logic of the program, the world was supposed to be recovering from fighting off the rule of genetically engineered supermen in the Eugenics Wars of the nineties.

By 1989, when the creators of Back to the Future II were dutifully placing flying cars and anti-gravity hoverboards in the hands of ordinary teenagers in the year 2015, it wasn’t clear if this was meant as a prediction or a joke.

The usual move in science fiction is to remain vague about the dates, so as to render “the future” a zone of pure fantasy, no different than Middle Earth or Narnia, or like Star Wars, “a long time ago in a galaxy far, far away.” As a result, our science fiction future is, most often, not a future at all, but more like an alternative dimension, a dream-time, a technological Elsewhere, existing in days to come in the same sense that elves and dragon-slayers existed in the past—another screen for the displacement of moral dramas and mythic fantasies into the dead ends of consumer pleasure.

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Might the cultural sensibility that came to be referred to as postmodernism best be seen as a prolonged meditation on all the technological changes that never happened? The question struck me as I watched one of the recent Star Wars movies. The movie was terrible, but I couldn’t help but feel impressed by the quality of the special effects. Recalling the clumsy special effects typical of fifties sci-fi films, I kept thinking how impressed a fifties audience would have been if they’d known what we could do by now—only to realize, “Actually, no. They wouldn’t be impressed at all, would they? They thought we’d be doing this kind of thing by now. Not just figuring out more sophisticated ways to simulate it.”

That last word—simulate—is key. The technologies that have advanced since the seventies are mainly either medical technologies or information technologies—largely, technologies of simulation. They are technologies of what Jean Baudrillard and Umberto Eco called the “hyper-real,” the ability to make imitations that are more realistic than originals. The postmodern sensibility, the feeling that we had somehow broken into an unprecedented new historical period in which we understood that there is nothing new; that grand historical narratives of progress and liberation were meaningless; that everything now was simulation, ironic repetition, fragmentation, and pastiche—all this makes sense in a technological environment in which the only breakthroughs were those that made it easier to create, transfer, and rearrange virtual projections of things that either already existed, or, we came to realize, never would. Surely, if we were vacationing in geodesic domes on Mars or toting about pocket-size nuclear fusion plants or telekinetic mind-reading devices no one would ever have been talking like this. The postmodern moment was a desperate way to take what could otherwise only be felt as a bitter disappointment and to dress it up as something epochal, exciting, and new.

In the earliest formulations, which largely came out of the Marxist tradition, a lot of this technological background was acknowledged. Fredric Jameson’s “Postmodernism, or the Cultural Logic of Late Capitalism” proposed the term “postmodernism” to refer to the cultural logic appropriate to a new, technological phase of capitalism, one that had been heralded by Marxist economist Ernest Mandel as early as 1972. Mandel had argued that humanity stood at the verge of a “third technological revolution,” as profound as the Agricultural or Industrial Revolution, in which computers, robots, new energy sources, and new information technologies would replace industrial labor—the “end of work” as it soon came to be called—reducing us all to designers and computer technicians coming up with crazy visions that cybernetic factories would produce.

End of work arguments were popular in the late seventies and early eighties as social thinkers pondered what would happen to the traditional working-class-led popular struggle once the working class no longer existed. (The answer: it would turn into identity politics.) Jameson thought of himself as exploring the forms of consciousness and historical sensibilities likely to emerge from this new age.

What happened, instead, is that the spread of information technologies and new ways of organizing transport—the containerization of shipping, for example—allowed those same industrial jobs to be outsourced to East Asia, Latin America, and other countries where the availability of cheap labor allowed manufacturers to employ much less technologically sophisticated production-line techniques than they would have been obliged to employ at home.

From the perspective of those living in Europe, North America, and Japan, the results did seem to be much as predicted. Smokestack industries did disappear; jobs came to be divided between a lower stratum of service workers and an upper stratum sitting in antiseptic bubbles playing with computers. But below it all lay an uneasy awareness that the postwork civilization was a giant fraud. Our carefully engineered high-tech sneakers were not being produced by intelligent cyborgs or self-replicating molecular nanotechnology; they were being made on the equivalent of old-fashioned Singer sewing machines, by the daughters of Mexican and Indonesian farmers who, as the result of WTO or NAFTA–sponsored trade deals, had been ousted from their ancestral lands. It was a guilty awareness that lay beneath the postmodern sensibility and its celebration of the endless play of images and surfaces.

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Why did the projected explosion of technological growth everyone was expecting—the moon bases, the robot factories—fail to happen? There are two possibilities. Either our expectations about the pace of technological change were unrealistic (in which case, we need to know why so many intelligent people believed they were not) or our expectations were not unrealistic (in which case, we need to know what happened to derail so many credible ideas and prospects).

Most social analysts choose the first explanation and trace the problem to the Cold War space race. Why, these analysts wonder, did both the United States and the Soviet Union become so obsessed with the idea of manned space travel? It was never an efficient way to engage in scientific research. And it encouraged unrealistic ideas of what the human future would be like.

Could the answer be that both the United States and the Soviet Union had been, in the century before, societies of pioneers, one expanding across the Western frontier, the other across Siberia? Didn’t they share a commitment to the myth of a limitless, expansive future, of human colonization of vast empty spaces, that helped convince the leaders of both superpowers they had entered into a “space age” in which they were battling over control of the future itself? All sorts of myths were at play here, no doubt, but that proves nothing about the feasibility of the project.

Some of those science fiction fantasies (at this point we can’t know which ones) could have been brought into being. For earlier generations, many science fiction fantasies had been brought into being. Those who grew up at the turn of the century reading Jules Verne or H.G. Wells imagined the world of, say, 1960 with flying machines, rocket ships, submarines, radio, and television—and that was pretty much what they got. If it wasn’t unrealistic in 1900 to dream of men traveling to the moon, then why was it unrealistic in the sixties to dream of jet-packs and robot laundry-maids?

In fact, even as those dreams were being outlined, the material base for their achievement was beginning to be whittled away. There is reason to believe that even by the fifties and sixties, the pace of technological innovation was slowing down from the heady pace of the first half of the century. There was a last spate in the fifties when microwave ovens (1954), the Pill (1957), and lasers (1958) all appeared in rapid succession. But since then, technological advances have taken the form of clever new ways of combining existing technologies (as in the space race) and new ways of putting existing technologies to consumer use (the most famous example is television, invented in 1926, but mass produced only after the war.) Yet, in part because the space race gave everyone the impression that remarkable advances were happening, the popular impression during the sixties was that the pace of technological change was speeding up in terrifying, uncontrollable ways.

Alvin Toffler’s 1970 best seller Future Shock argued that almost all the social problems of the sixties could be traced back to the increasing pace of technological change. The endless outpouring of scientific breakthroughs transformed the grounds of daily existence, and left Americans without any clear idea of what normal life was. Just consider the family, where not just the Pill, but also the prospect of in vitro fertilization, test tube babies, and sperm and egg donation were about to make the idea of motherhood obsolete.

Humans were not psychologically prepared for the pace of change, Toffler wrote. He coined a term for the phenomenon: “accelerative thrust.” It had begun with the Industrial Revolution, but by roughly 1850, the effect had become unmistakable. Not only was everything around us changing, but most of it—human knowledge, the size of the population, industrial growth, energy use—was changing exponentially. The only solution, Toffler argued, was to begin some kind of control over the process, to create institutions that would assess emerging technologies and their likely effects, to ban technologies likely to be too socially disruptive, and to guide development in the direction of social harmony.

While many of the historical trends Toffler describes are accurate, the book appeared when most of these exponential trends halted. It was right around 1970 when the increase in the number of scientific papers published in the world—a figure that had doubled every fifteen years since, roughly, 1685—began leveling off. The same was true of books and patents.

Toffler’s use of acceleration was particularly unfortunate. For most of human history, the top speed at which human beings could travel had been around 25 miles per hour. By 1900 it had increased to 100 miles per hour, and for the next seventy years it did seem to be increasing exponentially. By the time Toffler was writing, in 1970, the record for the fastest speed at which any human had traveled stood at roughly 25,000 mph, achieved by the crew of Apollo 10 in 1969, just one year before. At such an exponential rate, it must have seemed reasonable to assume that within a matter of decades, humanity would be exploring other solar systems.

Since 1970, no further increase has occurred. The record for the fastest a human has ever traveled remains with the crew of Apollo 10. True, the commercial airliner Concorde, which first flew in 1969, reached a maximum speed of 1,400 mph. And the Soviet Tupolev Tu-144, which flew first, reached an even faster speed of 1,553 mph. But those speeds not only have failed to increase; they have decreased since the Tupolev Tu-144 was cancelled and the Concorde was abandoned.

None of this stopped Toffler’s own career. He kept retooling his analysis to come up with new spectacular pronouncements. In 1980, he produced The Third Wave, its argument lifted from Ernest Mandel’s “third technological revolution”—except that while Mandel thought these changes would spell the end of capitalism, Toffler assumed capitalism was eternal. By 1990, Toffler was the personal intellectual guru to Republican congressman Newt Gingrich, who claimed that his 1994 “Contract With America” was inspired, in part, by the understanding that the United States needed to move from an antiquated, materialist, industrial mind-set to a new, free-market, information age, Third Wave civilization.

There are all sorts of ironies in this connection. One of Toffler’s greatest achievements was inspiring the government to create an Office of Technology Assessment (OTA). One of Gingrich’s first acts on winning control of the House of Representatives in 1995 was defunding the OTA as an example of useless government extravagance. Still, there’s no contradiction here. By this time, Toffler had long since given up on influencing policy by appealing to the general public; he was making a living largely by giving seminars to CEOs and corporate think tanks. His insights had been privatized.

Gingrich liked to call himself a “conservative futurologist.” This, too, might seem oxymoronic; but, in fact, Toffler’s own conception of futurology was never progressive. Progress was always presented as a problem that needed to be solved.

Toffler might best be seen as a lightweight version of the nineteenth-century social theorist Auguste Comte, who believed that he was standing on the brink of a new age—in his case, the Industrial Age—driven by the inexorable progress of technology, and that the social cataclysms of his times were caused by the social system not adjusting. The older feudal order had developed Catholic theology, a way of thinking about man’s place in the cosmos perfectly suited to the social system of the time, as well as an institutional structure, the Church, that conveyed and enforced such ideas in a way that could give everyone a sense of meaning and belonging. The Industrial Age had developed its own system of ideas—science—but scientists had not succeeded in creating anything like the Catholic Church. Comte concluded that we needed to develop a new science, which he dubbed “sociology,” and said that sociologists should play the role of priests in a new Religion of Society that would inspire everyone with a love of order, community, work discipline, and family values. Toffler was less ambitious; his futurologists were not supposed to play the role of priests.

Gingrich had a second guru, a libertarian theologian named George Gilder, and Gilder, like Toffler, was obsessed with technology and social change. In an odd way, Gilder was more optimistic. Embracing a radical version of Mandel’s Third Wave argument, he insisted that what we were seeing with the rise of computers was an “overthrow of matter.” The old, materialist Industrial Society, where value came from physical labor, was giving way to an Information Age where value emerges directly from the minds of entrepreneurs, just as the world had originally appeared ex nihilo from the mind of God, just as money, in a proper supply-side economy, emerged ex nihilo from the Federal Reserve and into the hands of value-creating capitalists. Supply-side economic policies, Gilder concluded, would ensure that investment would continue to steer away from old government boondoggles like the space program and toward more productive information and medical technologies.

But if there was a conscious, or semi-conscious, move away from investment in research that might lead to better rockets and robots, and toward research that would lead to such things as laser printers and CAT scans, it had begun well before Toffler’s Future Shock (1970) and Gilder’s Wealth and Poverty (1981). What their success shows is that the issues they raised—that existing patterns of technological development would lead to social upheaval, and that we needed to guide technological development in directions that did not challenge existing structures of authority—echoed in the corridors of power. Statesmen and captains of industry had been thinking about such questions for some time.

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Industrial capitalism has fostered an extremely rapid rate of scientific advance and technological innovation—one with no parallel in previous human history. Even capitalism’s greatest detractors, Karl Marx and Friedrich Engels, celebrated its unleashing of the “productive forces.” Marx and Engels also believed that capitalism’s continual need to revolutionize the means of industrial production would be its undoing. Marx argued that, for certain technical reasons, value—and therefore profits—can be extracted only from human labor. Competition forces factory owners to mechanize production, to reduce labor costs, but while this is to the short-term advantage of the firm, mechanization’s effect is to drive down the general rate of profit.

For 150 years, economists have debated whether all this is true. But if it is true, then the decision by industrialists not to pour research funds into the invention of the robot factories that everyone was anticipating in the sixties, and instead to relocate their factories to labor-intensive, low-tech facilities in China or the Global South makes a great deal of sense.

As I’ve noted, there’s reason to believe the pace of technological innovation in productive processes—the factories themselves—began to slow in the fifties and sixties, but the side effects of America’s rivalry with the Soviet Union made innovation appear to accelerate. There was the awesome space race, alongside frenetic efforts by U.S. industrial planners to apply existing technologies to consumer purposes, to create an optimistic sense of burgeoning prosperity and guaranteed progress that would undercut the appeal of working-class politics.

These moves were reactions to initiatives from the Soviet Union. But this part of the history is difficult for Americans to remember, because at the end of the Cold War, the popular image of the Soviet Union switched from terrifyingly bold rival to pathetic basket case—the exemplar of a society that could not work. Back in the fifties, in fact, many United States planners suspected the Soviet system worked better. Certainly, they recalled the fact that in the thirties, while the United States had been mired in depression, the Soviet Union had maintained almost unprecedented economic growth rates of 10 percent to 12 percent a year—an achievement quickly followed by the production of tank armies that defeated Nazi Germany, then by the launching of Sputnik in 1957, then by the first manned spacecraft, the Vostok, in 1961.

It’s often said the Apollo moon landing was the greatest historical achievement of Soviet communism. Surely, the United States would never have contemplated such a feat had it not been for the cosmic ambitions of the Soviet Politburo. We are used to thinking of the Politburo as a group of unimaginative gray bureaucrats, but they were bureaucrats who dared to dream astounding dreams. The dream of world revolution was only the first. It’s also true that most of them—changing the course of mighty rivers, this sort of thing—either turned out to be ecologically and socially disastrous, or, like Joseph Stalin’s one-hundred-story Palace of the Soviets or a twenty-story statue of Vladimir Lenin, never got off the ground.

After the initial successes of the Soviet space program, few of these schemes were realized, but the leadership never ceased coming up with new ones. Even in the eighties, when the United States was attempting its own last, grandiose scheme, Star Wars, the Soviets were planning to transform the world through creative uses of technology. Few outside of Russia remember most of these projects, but great resources were devoted to them. It’s also worth noting that unlike the Star Wars project, which was designed to sink the Soviet Union, most were not military in nature: as, for instance, the attempt to solve the world hunger problem by harvesting lakes and oceans with an edible bacteria called spirulina, or to solve the world energy problem by launching hundreds of gigantic solar-power platforms into orbit and beaming the electricity back to earth.

The American victory in the space race meant that, after 1968, U.S. planners no longer took the competition seriously. As a result, the mythology of the final frontier was maintained, even as the direction of research and development shifted away from anything that might lead to the creation of Mars bases and robot factories.

The standard line is that all this was a result of the triumph of the market. The Apollo program was a Big Government project, Soviet-inspired in the sense that it required a national effort coordinated by government bureaucracies. As soon as the Soviet threat drew safely out of the picture, though, capitalism was free to revert to lines of technological development more in accord with its normal, decentralized, free-market imperatives—such as privately funded research into marketable products like personal computers. This is the line that men like Toffler and Gilder took in the late seventies and early eighties.

In fact, the United States never did abandon gigantic, government-controlled schemes of technological development. Mainly, they just shifted to military research—and not just to Soviet-scale schemes like Star Wars, but to weapons projects, research in communications and surveillance technologies, and similar security-related concerns. To some degree this had always been true: the billions poured into missile research had always dwarfed the sums allocated to the space program. Yet by the seventies, even basic research came to be conducted following military priorities. One reason we don’t have robot factories is because roughly 95 percent of robotics research funding has been channeled through the Pentagon, which is more interested in developing unmanned drones than in automating paper mills.

A case could be made that even the shift to research and development on information technologies and medicine was not so much a reorientation toward market-driven consumer imperatives, but part of an all-out effort to follow the technological humbling of the Soviet Union with total victory in the global class war—seen simultaneously as the imposition of absolute U.S. military dominance overseas, and, at home, the utter rout of social movements.

For the technologies that did emerge proved most conducive to surveillance, work discipline, and social control. Computers have opened up certain spaces of freedom, as we’re constantly reminded, but instead of leading to the workless utopia Abbie Hoffman imagined, they have been employed in such a way as to produce the opposite effect. They have enabled a financialization of capital that has driven workers desperately into debt, and, at the same time, provided the means by which employers have created “flexible” work regimes that have both destroyed traditional job security and increased working hours for almost everyone. Along with the export of factory jobs, the new work regime has routed the union movement and destroyed any possibility of effective working-class politics.

Meanwhile, despite unprecedented investment in research on medicine and life sciences, we await cures for cancer and the common cold, and the most dramatic medical breakthroughs we have seen have taken the form of drugs such as Prozac, Zoloft, or Ritalin—tailor-made to ensure that the new work demands don’t drive us completely, dysfunctionally crazy.

With results like these, what will the epitaph for neoliberalism look like? I think historians will conclude it was a form of capitalism that systematically prioritized political imperatives over economic ones. Given a choice between a course of action that would make capitalism seem the only possible economic system, and one that would transform capitalism into a viable, long-term economic system, neoliberalism chooses the former every time. There is every reason to believe that destroying job security while increasing working hours does not create a more productive (let alone more innovative or loyal) workforce. Probably, in economic terms, the result is negative—an impression confirmed by lower growth rates in just about all parts of the world in the eighties and nineties.

But the neoliberal choice has been effective in depoliticizing labor and overdetermining the future. Economically, the growth of armies, police, and private security services amounts to dead weight. It’s possible, in fact, that the very dead weight of the apparatus created to ensure the ideological victory of capitalism will sink it. But it’s also easy to see how choking off any sense of an inevitable, redemptive future that could be different from our world is a crucial part of the neoliberal project.

At this point all the pieces would seem to be falling neatly into place. By the sixties, conservative political forces were growing skittish about the socially disruptive effects of technological progress, and employers were beginning to worry about the economic impact of mechanization. The fading Soviet threat allowed for a reallocation of resources in directions seen as less challenging to social and economic arrangements, or indeed directions that could support a campaign of reversing the gains of progressive social movements and achieving a decisive victory in what U.S. elites saw as a global class war. The change of priorities was introduced as a withdrawal of big-government projects and a return to the market, but in fact the change shifted government-directed research away from programs like NASA or alternative energy sources and toward military, information, and medical technologies.

Of course this doesn’t explain everything. Above all, it does not explain why, even in those areas that have become the focus of well-funded research projects, we have not seen anything like the kind of advances anticipated fifty years ago. If 95 percent of robotics research has been funded by the military, then where are the Klaatu-style killer robots shooting death rays from their eyes?

Obviously, there have been advances in military technology in recent decades. One of the reasons we all survived the Cold War is that while nuclear bombs might have worked as advertised, their delivery systems did not; intercontinental ballistic missiles weren’t capable of striking cities, let alone specific targets inside cities, and this fact meant there was little point in launching a nuclear first strike unless you intended to destroy the world.

Contemporary cruise missiles are accurate by comparison. Still, precision weapons never do seem capable of assassinating specific individuals (Saddam, Osama, Qaddafi), even when hundreds are dropped. And ray guns have not materialized—surely not for lack of trying. We can assume the Pentagon has spent billions on death ray research, but the closest they’ve come so far are lasers that might, if aimed correctly, blind an enemy gunner looking directly at the beam. Aside from being unsporting, this is pathetic: lasers are a fifties technology. Phasers that can be set to stun do not appear to be on the drawing boards; and when it comes to infantry combat, the preferred weapon almost everywhere remains the AK-47, a Soviet design named for the year it was introduced: 1947.

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The Internet is a remarkable innovation, but all we are talking about is a super-fast and globally accessible combination of library, post office, and mail-order catalogue. Had the Internet been described to a science fiction aficionado in the fifties and sixties and touted as the most dramatic technological achievement since his time, his reaction would have been disappointment. Fifty years and this is the best our scientists managed to come up with? We expected computers that would think!

Overall, levels of research funding have increased dramatically since the seventies. Admittedly, the proportion of that funding that comes from the corporate sector has increased most dramatically, to the point that private enterprise is now funding twice as much research as the government, but the increase is so large that the total amount of government research funding, in real-dollar terms, is much higher than it was in the sixties. “Basic,” “curiosity-driven,” or “blue skies” research—the kind that is not driven by the prospect of any immediate practical application, and that is most likely to lead to unexpected breakthroughs—occupies an ever smaller proportion of the total, though so much money is being thrown around nowadays that overall levels of basic research funding have increased.

Yet most observers agree that the results have been paltry. Certainly we no longer see anything like the continual stream of conceptual revolutions—genetic inheritance, relativity, psychoanalysis, quantum mechanics—that people had grown used to, and even expected, a hundred years before. Why?

Part of the answer has to do with the concentration of resources on a handful of gigantic projects: “big science,” as it has come to be called. The Human Genome Project is often held out as an example. After spending almost three billion dollars and employing thousands of scientists and staff in five different countries, it has mainly served to establish that there isn’t very much to be learned from sequencing genes that’s of much use to anyone else. Even more, the hype and political investment surrounding such projects demonstrate the degree to which even basic research now seems to be driven by political, administrative, and marketing imperatives that make it unlikely anything revolutionary will happen.

Here, our fascination with the mythic origins of Silicon Valley and the Internet has blinded us to what’s really going on. It has allowed us to imagine that research and development is now driven, primarily, by small teams of plucky entrepreneurs, or the sort of decentralized cooperation that creates open-source software. This is not so, even though such research teams are most likely to produce results. Research and development is still driven by giant bureaucratic projects.

What has changed is the bureaucratic culture. The increasing interpenetration of government, university, and private firms has led everyone to adopt the language, sensibilities, and organizational forms that originated in the corporate world. Although this might have helped in creating marketable products, since that is what corporate bureaucracies are designed to do, in terms of fostering original research, the results have been catastrophic.

My own knowledge comes from universities, both in the United States and Britain. In both countries, the last thirty years have seen a veritable explosion of the proportion of working hours spent on administrative tasks at the expense of pretty much everything else. In my own university, for instance, we have more administrators than faculty members, and the faculty members, too, are expected to spend at least as much time on administration as on teaching and research combined. The same is true, more or less, at universities worldwide.

The growth of administrative work has directly resulted from introducing corporate management techniques. Invariably, these are justified as ways of increasing efficiency and introducing competition at every level. What they end up meaning in practice is that everyone winds up spending most of their time trying to sell things: grant proposals; book proposals; assessments of students’ jobs and grant applications; assessments of our colleagues; prospectuses for new interdisciplinary majors; institutes; conference workshops; universities themselves (which have now become brands to be marketed to prospective students or contributors); and so on.

As marketing overwhelms university life, it generates documents about fostering imagination and creativity that might just as well have been designed to strangle imagination and creativity in the cradle. No major new works of social theory have emerged in the United States in the last thirty years. We have been reduced to the equivalent of medieval scholastics, writing endless annotations of French theory from the seventies, despite the guilty awareness that if new incarnations of Gilles Deleuze, Michel Foucault, or Pierre Bourdieu were to appear in the academy today, we would deny them tenure.

There was a time when academia was society’s refuge for the eccentric, brilliant, and impractical. No longer. It is now the domain of professional self-marketers. As a result, in one of the most bizarre fits of social self-destructiveness in history, we seem to have decided we have no place for our eccentric, brilliant, and impractical citizens. Most languish in their mothers’ basements, at best making the occasional, acute intervention on the Internet.

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If all this is true in the social sciences, where research is still carried out with minimal overhead largely by individuals, one can imagine how much worse it is for astrophysicists. And, indeed, one astrophysicist, Jonathan Katz, has recently warned students pondering a career in the sciences. Even if you do emerge from the usual decade-long period languishing as someone else’s flunky, he says, you can expect your best ideas to be stymied at every point:

You will spend your time writing proposals rather than doing research. Worse, because your proposals are judged by your competitors, you cannot follow your curiosity, but must spend your effort and talents on anticipating and deflecting criticism rather than on solving the important scientific problems. . . . It is proverbial that original ideas are the kiss of death for a proposal, because they have not yet been proved to work.

That pretty much answers the question of why we don’t have teleportation devices or antigravity shoes. Common sense suggests that if you want to maximize scientific creativity, you find some bright people, give them the resources they need to pursue whatever idea comes into their heads, and then leave them alone. Most will turn up nothing, but one or two may well discover something. But if you want to minimize the possibility of unexpected breakthroughs, tell those same people they will receive no resources at all unless they spend the bulk of their time competing against each other to convince you they know in advance what they are going to discover.

In the natural sciences, to the tyranny of managerialism we can add the privatization of research results. As the British economist David Harvie has reminded us, “open source” research is not new. Scholarly research has always been open source, in the sense that scholars share materials and results. There is competition, certainly, but it is “convivial.” This is no longer true of scientists working in the corporate sector, where findings are jealously guarded, but the spread of the corporate ethos within the academy and research institutes themselves has caused even publicly funded scholars to treat their findings as personal property. Academic publishers ensure that findings that are published are increasingly difficult to access, further enclosing the intellectual commons. As a result, convivial, open-source competition turns into something much more like classic market competition.

There are many forms of privatization, up to and including the simple buying up and suppression of inconvenient discoveries by large corporations fearful of their economic effects. (We cannot know how many synthetic fuel formulae have been bought up and placed in the vaults of oil companies, but it’s hard to imagine nothing like this happens.) More subtle is the way the managerial ethos discourages everything adventurous or quirky, especially if there is no prospect of immediate results. Oddly, the Internet can be part of the problem here. As Neal Stephenson put it:

Most people who work in corporations or academia have witnessed something like the following: A number of engineers are sitting together in a room, bouncing ideas off each other. Out of the discussion emerges a new concept that seems promising. Then some laptop-wielding person in the corner, having performed a quick Google search, announces that this “new” idea is, in fact, an old one; it—or at least something vaguely similar—has already been tried. Either it failed, or it succeeded. If it failed, then no manager who wants to keep his or her job will approve spending money trying to revive it. If it succeeded, then it’s patented and entry to the market is presumed to be unattainable, since the first people who thought of it will have “first-mover advantage” and will have created “barriers to entry.” The number of seemingly promising ideas that have been crushed in this way must number in the millions.

And so a timid, bureaucratic spirit suffuses every aspect of cultural life. It comes festooned in a language of creativity, initiative, and entrepreneurialism. But the language is meaningless. Those thinkers most likely to make a conceptual breakthrough are the least likely to receive funding, and, if breakthroughs occur, they are not likely to find anyone willing to follow up on their most daring implications.

Giovanni Arrighi has noted that after the South Sea Bubble, British capitalism largely abandoned the corporate form. By the time of the Industrial Revolution, Britain had instead come to rely on a combination of high finance and small family firms—a pattern that held throughout the next century, the period of maximum scientific and technological innovation. (Britain at that time was also notorious for being just as generous to its oddballs and eccentrics as contemporary America is intolerant. A common expedient was to allow them to become rural vicars, who, predictably, became one of the main sources for amateur scientific discoveries.)

Contemporary, bureaucratic corporate capitalism was a creation not of Britain, but of the United States and Germany, the two rival powers that spent the first half of the twentieth century fighting two bloody wars over who would replace Britain as a dominant world power—wars that culminated, appropriately enough, in government-sponsored scientific programs to see who would be the first to discover the atom bomb. It is significant, then, that our current technological stagnation seems to have begun after 1945, when the United States replaced Britain as organizer of the world economy.

Americans do not like to think of themselves as a nation of bureaucrats—quite the opposite—but the moment we stop imagining bureaucracy as a phenomenon limited to government offices, it becomes obvious that this is precisely what we have become. The final victory over the Soviet Union did not lead to the domination of the market, but, in fact, cemented the dominance of conservative managerial elites, corporate bureaucrats who use the pretext of short-term, competitive, bottom-line thinking to squelch anything likely to have revolutionary implications of any kind.

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If we do not notice that we live in a bureaucratic society, that is because bureaucratic norms and practices have become so all-pervasive that we cannot see them, or, worse, cannot imagine doing things any other way.

Computers have played a crucial role in this narrowing of our social imaginations. Just as the invention of new forms of industrial automation in the eighteenth and nineteenth centuries had the paradoxical effect of turning more and more of the world’s population into full-time industrial workers, so has all the software designed to save us from administrative responsibilities turned us into part- or full-time administrators. In the same way that university professors seem to feel it is inevitable they will spend more of their time managing grants, so affluent housewives simply accept that they will spend weeks every year filling out forty-page online forms to get their children into grade schools. We all spend increasing amounts of time punching passwords into our phones to manage bank and credit accounts and learning how to perform jobs once performed by travel agents, brokers, and accountants.

Someone once figured out that the average American will spend a cumulative six months of life waiting for traffic lights to change. I don’t know if similar figures are available for how long it takes to fill out forms, but it must be at least as long. No population in the history of the world has spent nearly so much time engaged in paperwork.

In this final, stultifying stage of capitalism, we are moving from poetic technologies to bureaucratic technologies. By poetic technologies I refer to the use of rational and technical means to bring wild fantasies to reality. Poetic technologies, so understood, are as old as civilization. Lewis Mumford noted that the first complex machines were made of people. Egyptian pharaohs were able to build the pyramids only because of their mastery of administrative procedures, which allowed them to develop production-line techniques, dividing up complex tasks into dozens of simple operations and assigning each to one team of workmen—even though they lacked mechanical technology more complex than the inclined plane and lever. Administrative oversight turned armies of peasant farmers into the cogs of a vast machine. Much later, after cogs had been invented, the design of complex machinery elaborated principles originally developed to organize people.

Yet we have seen those machines—whether their moving parts are arms and torsos or pistons, wheels, and springs—being put to work to realize impossible fantasies: cathedrals, moon shots, transcontinental railways. Certainly, poetic technologies had something terrible about them; the poetry is likely to be as much of dark satanic mills as of grace or liberation. But the rational, administrative techniques were always in service to some fantastic end.

From this perspective, all those mad Soviet plans—even if never realized—marked the climax of poetic technologies. What we have now is the reverse. It’s not that vision, creativity, and mad fantasies are no longer encouraged, but that most remain free-floating; there’s no longer even the pretense that they could ever take form or flesh. The greatest and most powerful nation that has ever existed has spent the last decades telling its citizens they can no longer contemplate fantastic collective enterprises, even if—as the environmental crisis demands— the fate of the earth depends on it.

What are the political implications of all this? First of all, we need to rethink some of our most basic assumptions about the nature of capitalism. One is that capitalism is identical with the market, and that both therefore are inimical to bureaucracy, which is supposed to be a creature of the state.

The second assumption is that capitalism is in its nature technologically progressive. It would seem that Marx and Engels, in their giddy enthusiasm for the industrial revolutions of their day, were wrong about this. Or, to be more precise: they were right to insist that the mechanization of industrial production would destroy capitalism; they were wrong to predict that market competition would compel factory owners to mechanize anyway. If it didn’t happen, that is because market competition is not, in fact, as essential to the nature of capitalism as they had assumed. If nothing else, the current form of capitalism, where much of the competition seems to take the form of internal marketing within the bureaucratic structures of large semi-monopolistic enterprises, would come as a complete surprise to them.

Defenders of capitalism make three broad historical claims: first, that it has fostered rapid scientific and technological growth; second, that however much it may throw enormous wealth to a small minority, it does so in such a way as to increase overall prosperity; third, that in doing so, it creates a more secure and democratic world for everyone. It is clear that capitalism is not doing any of these things any longer. In fact, many of its defenders are retreating from claiming that it is a good system and instead falling back on the claim that it is the only possible system—or, at least, the only possible system for a complex, technologically sophisticated society such as our own.

But how could anyone argue that current economic arrangements are also the only ones that will ever be viable under any possible future technological society? The argument is absurd. How could anyone know?

Granted, there are people who take that position—on both ends of the political spectrum. As an anthropologist and anarchist, I encounter anticivilizational types who insist not only that current industrial technology leads only to capitalist-style oppression, but that this must necessarily be true of any future technology as well, and therefore that human liberation can be achieved only by returning to the Stone Age. Most of us are not technological determinists.

But claims for the inevitability of capitalism have to be based on a kind of technological determinism. And for that very reason, if the aim of neoliberal capitalism is to create a world in which no one believes any other economic system could work, then it needs to suppress not just any idea of an inevitable redemptive future, but any radically different technological future. Yet there’s a contradiction. Defenders of capitalism cannot mean to convince us that technological change has ended—since that would mean capitalism is not progressive. No, they mean to convince us that technological progress is indeed continuing, that we do live in a world of wonders, but that those wonders take the form of modest improvements (the latest iPhone!), rumors of inventions about to happen (“I hear they are going to have flying cars pretty soon”), complex ways of juggling information and imagery, and still more complex platforms for filling out of forms.

I do not mean to suggest that neoliberal capitalism—or any other system—can be successful in this regard. First, there’s the problem of trying to convince the world you are leading the way in technological progress when you are holding it back. The United States, with its decaying infrastructure, paralysis in the face of global warming, and symbolically devastating abandonment of its manned space program just as China accelerates its own, is doing a particularly bad public relations job. Second, the pace of change can’t be held back forever. Breakthroughs will happen; inconvenient discoveries cannot be permanently suppressed. Other, less bureaucratized parts of the world—or at least, parts of the world with bureaucracies that are not so hostile to creative thinking—will slowly but inevitably attain the resources required to pick up where the United States and its allies have left off. The Internet does provide opportunities for collaboration and dissemination that may help break us through the wall as well. Where will the breakthrough come? We can’t know. Maybe 3D printing will do what the robot factories were supposed to. Or maybe it will be something else. But it will happen.

About one conclusion we can feel especially confident: it will not happen within the framework of contemporary corporate capitalism—or any form of capitalism. To begin setting up domes on Mars, let alone to develop the means to figure out if there are alien civilizations to contact, we’re going to have to figure out a different economic system. Must the new system take the form of some massive new bureaucracy? Why do we assume it must? Only by breaking up existing bureaucratic structures can we begin. And if we’re going to invent robots that will do our laundry and tidy up the kitchen, then we’re going to have to make sure that whatever replaces capitalism is based on a far more egalitarian distribution of wealth and power—one that no longer contains either the super-rich or the desperately poor willing to do their housework. Only then will technology begin to be marshaled toward human needs. And this is the best reason to break free of the dead hand of the hedge fund managers and the CEOs—to free our fantasies from the screens in which such men have imprisoned them, to let our imaginations once again become a material force in human history.


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[Oct 09, 2018] The Continuing Dominance of the Dollar by Josepth Joyce

Notable quotes:
"... Financial Times ..."
"... Global Financial Stability ..."
Oct 09, 2018 | angrybearblog.com

Why does the dollar continue to possess a hegemonic status a decade after the crisis that seemed to signal an end to U.S.-U.K. dominated finance? Gillian Tett of the Financial Times offers several reasons. The first is the global reach of U.S. based banks. U.S. banks are seen as stable, particularly when compared to European banks. Any listing of the largest international banks will be dominated by Chinese banks, and these institutions have expanded their international business . But the Chinese banks will conduct business in dollars when necessary. Tett's second reason is the relative strength of the U.S. economy, which grew at a 4.1% pace in the second quarter. The third reason is the liquidity and credibility of U.S. financial markets, which are superior to those of any rivals.

The U.S. benefits from its financial dominance in several ways. Jeff Sachs of Columbia University points out that the cost of financing government deficits is lower due to the acceptance of U.S. Treasury securities as "riskless assets." U.S. banks and other institutions earn profits on their foreign operations. In addition, the use of our banking network for international transactions provides the U.S. government with a powerful foreign policy tool in the form of sanctions that exclude foreign individuals, firms or governments from this network .

There are risks to the system with this dependence. As U.S. interest rates continue to rise, loans that seemed reasonable before now become harder to finance. The burden of dollar-denominated debt also increases as the dollar appreciates. These developments exacerbate the repercussions of policy mistakes in Argentina and Turkey, but also affect other countries as well.

The IMF in its latest Global Financial Stability (see also here ) identifies another potential destabilizing feature of the current system. The IMF reports that the U.S. dollar balance sheets of non-U.S. banks show a reliance on short-term or wholesale funding. This reliance leaves the banks vulnerable to a liquidity freeze. The IMF is particularly concerned about the use of foreign exchange swaps, as swap markets can be quite volatile. While central banks have stablished their own network of swap lines , these have been criticized .

The status of the dollar as the primary international currency is not welcomed by foreign governments. The Russian government, for example, is seeking to use other currencies for its international commerce. China and Turkey have offered some support, but China is invested in promoting the use of its own currency. In addition, Russia's dependence on its oil exports will keep it tied to the dollar.

But interest in formulating a new international payments system has now spread outside of Russia and China. Germany's Foreign Minister Heiko Maas has called for the establishment of "U.S. independent payment channels" that would allow European firms to continue to deal with Iran despite the U.S. sanctions on that country. Chinese electronic payments systems are being used in Europe and the U.S. The dollar may not be replaced, but it may have to share its role as an international currency with other forms of payment if foreign nations calculate that the benefits of a new system outweigh its cost. Until now that calculation has always favored the dollar, but the reassessment of globalization initiated by the Trump administration may have lead to unexpected consequences.

[Oct 09, 2018] The Next Pillar Of Oil Demand Growth

Oct 09, 2018 | www.zerohedge.com

Authored by Nick Cunningham via Oilprice.com,

The debate about peak oil demand always tends to focus on how quickly electric vehicles will replace the internal-combustion engine , especially as EV sales are accelerating. However, the petrochemical sector will be much more difficult to dislodge , and with alternatives far behind, petrochemicals will account for an increasing share of crude oil demand growth in the years ahead.

[Oct 08, 2018] The city of Los Angeles has on its ballot for the November elections a measure to create a city-owned bank.

Oct 08, 2018 | www.moonofalabama.org

Grieved , Oct 7, 2018 4:13:53 PM | link

Our commenter psychohistorian and others interested in public banking, and the concept of money as a public utility rather than a private (and profit-gouging) instrument, may want to watch the latest Keiser Report, which has an interview with Ellen Brown.

Brown relates that the city of Los Angeles has on its ballot for the November elections a measure to create a city-owned bank. This was put on the ballot by the city council itself, prompted by a groundswell of support coming from constituents.

The rapid-fire interview doesn't go deeply into the politics behind this citizen initiative, but it seems like a happy story of young millennials looking for an alternative to Wall Street banks, and learning from Brown and others about the strong value of the public bank.

An interesting turn of events. The interview starts in the second half of the show at 14:40:

Episode 1289 Keiser Report

[Oct 08, 2018] The US neoliberal society is entering a deep, sustained political crisis and it is unclear what can bring us back from it other then the collapse

Oct 08, 2018 | crookedtimber.org

likbez

I think the US society is entering a deep, sustained political crisis and it is unclear what can bring us back from it other then the collapse, USSR-style. The USA slide into corporate socialism (which might be viewed as a flavor of neofascism) can't be disputed.

Looks like all democracies are unstable and prone to self-destruction. In modern America, the elite do not care about lower 80% of the population, and is over-engaged in cynical identity politics, race and gender-mongering. Anything to win votes.

MSM is still cheering on military misadventures that kill thousands of Americans, impoverish millions, and cost trillions. Congress looks even worse. Republican House leader Paul Ryan looks like 100% pure bought-and-paid-for tool of multinational corporations...

The scary thing for me is that the USA national problems are somewhat similar to the ones that the USSR experienced before the collapse. At least the level of degeneration of political elite of both parties (which in reality is a single party) is.

The only positive things is that there is viable alternative to neoliberalism on the horizon. But that does not mean that we can't experience 1930th on a new level again. Now several European countries such as Poland and Ukraine are already ruled by far right nationalist parties. Brazil is probably the next. So this or military rule in the USA is not out of question.

Ship of Fools is what the US empire and the US society looks like now. And that's not funny. Look at <a href="https://www.amazon.com/Ship-Fools-Selfish-Bringing-Revolution-ebook/dp/B071FFRJ48">"Ship of Fools: How a Selfish Ruling Class Is Bringing America to the Brink of Revolution"</a> by Tucker Carlson hits the mark when he says that the career politicians and other elites in this country have put the USA on a path of self-destruction.

Some other factors are also in play: one is that a country with 320 million population can't be governed by the same methods as a country of 76 million (1900). End of cheap oil is near and probably will occur within the next 50 years or so. Which means the end of neoliberalism as we know it.

Tucker states that the USA's neoliberal elite acquired control of a massive chunk of the country's wealth. And then successfully insulated themselves from the hoi polloi. They send their children to the Ivy League universities, live in enclosed compounds with security guards, travel in helicopters, etc. Kind of like French aristocracy on a new level ("Let them eat cakes"). "There's nothing more infuriating to a ruling class than contrary opinions. They're inconvenient and annoying. They're evidence of an ungrateful population... Above all, they constitute a threat to your authority." (insert sarcasm)

Donald Trump was in many ways an unappealing figure. He never hid that. Voters knew it. They just concluded that the options were worse -- and not just Hillary Clinton and the Democratic Party, but the Bush family and their donors and the entire Republican leadership, along with the hedge fund managers and media luminaries and corporate executives and Hollywood tastemakers and think tank geniuses and everyone else who created the world as it was in the fall of 2016: the people in charge. Trump might be vulgar and ignorant, but he wasn't responsible for the many disasters America's leaders created .

There was also the possibility that Trump might listen. At times he seemed interested in what voters thought. The people in charge demonstrably weren't. Virtually none of their core beliefs had majority support from the population they governed .Beginning on election night, they explained away their loss with theories as pat and implausible as a summer action movie: Trump won because fake news tricked simple minded voters. Trump won because Russian agents "hacked" the election. Trump won because mouth-breathers in the provinces were mesmerized by his gold jet and shiny cuff links.

From a reader review:

The New [Neoliberal] Elite speaks: "The Middle Class are losers and they have made bad choices, they haven't worked as hard as the New Elite have, they haven't gone to SAT Prep or LSAT prep so they lose, we win. We are the Elite and we know better than you because we got high SAT scores.

Do we have experience? Uh....well...no, few of us have been in the military, pulled KP, shot an M-16.... because we are better than that. Like they say only the losers go in the military. We in the New Elite have little empirical knowledge but we can recognize patterns very quickly."

Just look at Haley behavior in the UN and Trump trade wars and many things became more clear. the bet is on destruction of existing international institutions in order to save the USA elite. A the same time Trump trade wars threaten the neoliberal order so this might well be a path to the USA self-destruction.

On Capital hill rancor, a lack of civility and derisive descriptions are everywhere. Respect has gone out the window. Left and right wings of a single neoliberal party (much like CPSU was in the USSR) behave like drunk schoolchildren. Level of pettiness is simply amazing.

[Oct 02, 2018] Randy Wray Modern Monetary Theory How I Came to MMT and What I Include in MMT naked capitalism

Notable quotes:
"... By L. Randall Wray, Professor of Economics at Bard College. Originally published at New Economic Perspectives ..."
"... Treatise on Money ..."
"... State Theory of Money ..."
"... Money and Credit in Capitalist Economies ..."
"... Understanding Modern Money ..."
"... Modern Money Theory ..."
"... Payback: Debt and the shadow side of wealth ..."
"... Reclaiming the State ..."
"... Austerity: The History of a Dangerous Idea ..."
"... permanent Zirp (zero interest rate policy) is probably a better policy since it reduces the compounding of debt and the tendency for the rentier class to take over more of the economy. ..."
"... that one of the consequences of the protracted super-low interest rate regime of the post crisis era was to create a world of hurt for savers, particularly long-term savers like pension funds, life insurers and retirees. ..."
"... income inequality ..."
"... even after paying interest ..."
"... It seems to me that the US macroeconomic policy has been operating under MMT at least since FDR (see for example Beardsley Ruml from 1945). ..."
"... After learning MMT I've occasionally thought I should get a refund for the two economics degree's I originally received. ..."
"... See: https://mythfighter.com/2018/08/27/ten-answers-that-are-contrary-to-popular-wisdom/ ..."
"... There is no avoiding bad government. ..."
"... "Taxes or other obligations (fees, fines, tribute, tithes) drive the currency." ..."
"... "JG is a critical component of MMT. It anchors the currency and ensures that achieving full employment will enhance both price and financial stability." ..."
Oct 02, 2018 | www.nakedcapitalism.com

Randy Wray: Modern Monetary Theory – How I Came to MMT and What I Include in MMT Posted on October 2, 2018 by Yves Smith By L. Randall Wray, Professor of Economics at Bard College. Originally published at New Economic Perspectives

I was asked to give a short presentation at the MMT conference. What follows is the text version of my remarks, some of which I had to skip over in the interests of time. Many readers might want to skip to the bullet points near the end, which summarize what I include in MMT.

I'd also like to quickly respond to some comments that were made at the very last session of the conference -- having to do with "approachability" of the "original" creators of MMT. Like Bill Mitchell, I am uncomfortable with any discussion of "rockstars" or "heroes". I find this quite embarrassing. As Bill said, we're just doing our job. We are happy (or, more accurately pleasantly surprised) that so many people have found our work interesting and useful. I'm happy (even if uncomfortable) to sign books and to answer questions at such events. I don't mind emailed questions, however please understand that I receive hundreds of emails every day, and the vast majority of the questions I get have been answered hundreds, thousands, even tens of thousands of times by the developers of MMT. A quick reading of my Primer or search of NEP (and Bill's blog and Warren's blogs) will reveal answers to most questions. So please do some homework first. I receive a lot of "questions" that are really just a thinly disguised pretense to argue with MMT -- I don't have much patience with those. Almost every day I also receive a 2000+ word email laying out the writer's original thesis on how the economy works and asking me to defend MMT against that alternative vision. I am not going to engage in a debate via email. If you have an alternative, gather together a small group and work for 25 years to produce scholarly articles, popular blogs, and media attention -- as we have done for MMT -- and then I'll pay attention. That said, here you go: wrayr@umkc.edu .

******************************************************************************

As an undergraduate I studied psychology and social sciences -- but no economics, which probably gave me an advantage when I finally did come to economics. I began my economics career in my late 20's studying mostly Institutionalist and Marxist approaches while working for the local government in Sacramento. However, I did carefully read Keynes's General Theory at Sacramento State and one of my professors -- John Henry -- pushed me to go to St. Louis to study with Hyman Minsky, the greatest Post Keynesian economist.

I wrote my dissertation in Bologna under Minsky's direction, focusing on private banking and the rise of what we called "nonbank banks" and "off-balance sheet operations" (now called shadow banking). While in Bologna, I met Otto Steiger -- who had an alternative to the barter story of money that was based on his theory of property. I found it intriguing because it was consistent with some of Keynes's Treatise on Money that I was reading at the time. Also, I had found Knapp's State Theory of Money -- cited in both Steiger and Keynes–so I speculated on money's origins (in spite of Minsky's warning that he didn't want me to write Genesis ) and the role of the state in my dissertation that became a book in 1990 -- Money and Credit in Capitalist Economies -- that helped to develop the Post Keynesian endogenous money approach.

What was lacking in that literature was an adequate treatment of the role of the state–which played a passive role -- supplying reserves as demanded by private bankers -- that is the Post Keynesian accommodationist or Horzontalist approach. There was no discussion of the relation of money to fiscal policy at that time. As I continued to read about the history of money, I became more convinced that we need to put the state at the center. Fortunately I ran into two people that helped me to see how to do it.

First there was Warren Mosler, who I met online in the PKT discussion group; he insisted on viewing money as a tax-driven government monopoly. Second, I met Michael Hudson at a seminar at the Levy Institute, who provided the key to help unlock what Keynes had called his "Babylonian Madness" period -- when he was driven crazy trying to understand early money. Hudson argued that money was an invention of the authorities used for accounting purposes. So over the next decade I worked with a handful of people to put the state into monetary theory.

As we all know, the mainstream wants a small government, with a central bank that follows a rule (initially, a money growth rate but now some version of inflation targeting). The fiscal branch of government is treated like a household that faces a budget constraint. But this conflicts with Institutionalist theory as well as Keynes's own theory. As the great Institutionalist Fagg Foster -- who preceded me at the University of Denver–put it: whatever is technically feasible is financially feasible. How can we square that with the belief that sovereign government is financially constrained? And if private banks can create money endogenously -- without limit -- why is government constrained?

My second book, in 1998, provided a different view of sovereign spending. I also revisited the origins of money. By this time I had discovered the two best articles ever written on the nature of money -- by Mitchell Innes. Like Warren, Innes insisted that the dollar's value is derived from the tax that drives it. And he argued this has always been the case. This was also consistent with what Keynes claimed in the Treatise, where he said that money has been a state money for the past four thousand years, at least. I called this "modern money" with intentional irony -- and titled my 1998 book Understanding Modern Money as an inside joke. It only applies to the past 4000 years.

Surprisingly, this work was more controversial than the earlier endogenous money research. In my view it was a natural extension -- or more correctly, it was the prerequisite to a study of privately created money. You need the state's money before you can have private money. Eventually our work found acceptance outside economics -- especially in law schools, among historians, and with anthropologists.

For the most part, our fellow economists, including the heterodox ones, attacked us as crazy.

I benefited greatly by participating in law school seminars (in Tel Aviv, Cambridge, and Harvard) on the legal history of money -- that is where I met Chris Desan and later Farley Grubb, and eventually Rohan Grey. Those who knew the legal history of money had no problem in adopting MMT view -- unlike economists.

I remember one of the Harvard seminars when a prominent Post Keynesian monetary theorist tried to argue against the taxes drive money view. He said he never thinks about taxes when he accepts money -- he accepts currency because he believes he can fob it off on Buffy Sue. The audience full of legal historians broke out in an explosion of laughter -- yelling "it's the taxes, stupid". All he could do in response was to mumble that he might have to think more about it.

Another prominent Post Keynesian claimed we had two things wrong. First, government debt isn't special -- debt is debt. Second, he argued we don't need double entry book-keeping -- his model has only single entry book-keeping. Years later he agreed that private debt is more dangerous than sovereign debt, and he's finally learned double-entry accounting. But of course whenever you are accounting for money you have to use quadruple entry book-keeping. Maybe in another dozen years he'll figure that out.

As a student I had read a lot of anthropology -- as most Institutionalists do. So I knew that money could not have come out of tribal economies based on barter exchange. As you all know, David Graeber's book insisted that anthropologists have never found any evidence of barter-based markets. Money preceded market exchange.

Studying history also confirmed our story, but you have to carefully read between the lines. Most historians adopt monetarism because the only economics they know is Friedman–who claims that money causes inflation. Almost all of them also adopt a commodity money view -- gold was good money and fiat paper money causes inflation. If you ignore those biases, you can learn a lot about the nature of money from historians.

Farley Grubb -- the foremost authority on Colonial currency -- proved that the American colonists understood perfectly well that taxes drive money. Every Act that authorized the issue of paper money imposed a Redemption Tax. The colonies burned all their tax revenue. Again, history shows that this has always been true. All money must be redeemed -- that is, accepted by its issuer in payment. As Innes said, that is the fundamental nature of credit. It is written right there in the early acts by the American colonies. Even a gold coin is the issuer's IOU, redeemed in payment of taxes. Once you understand that, you understand the nature of money.

So we were winning the academic debates, across a variety of disciplines. But we had a hard time making progress in economics or in policy circles. Bill, Warren, Mat Forstater and I used to meet up every year or so to count the number of economists who understood what we were talking about. It took over decade before we got up to a dozen. I can remember telling Pavlina Tcherneva back around 2005 that I was about ready to give it up.

But in 2007, Warren, Bill and I met to discuss writing an MMT textbook. Bill and I knew the odds were against us -- it would be for a small market, consisting mostly of our former students. Still, we decided to go for it. Here we are -- another dozen years later -- and the textbook is going to be published. MMT is everywhere. It was even featured in a New Yorker crossword puzzle in August. You cannot get more mainstream than that.

We originally titled our textbook Modern Money Theory , but recently decided to just call it Macroeconomics . There's no need to modify that with a subtitle. What we do is Macroeconomics. There is no coherent alternative to MMT.

A couple of years ago Charles Goodhart told me: "You won. Declare victory but be magnanimous about it." After so many years of fighting, both of those are hard to do. We won. Be nice.

Let me finish with 10 bullet points of what I include in MMT:

1. What is money: An IOU denominated in a socially sanctioned money of account. In almost all known cases, it is the authority -- the state -- that chooses the money of account. This comes from Knapp, Innes, Keynes, Geoff Ingham, and Minsky.

2. Taxes or other obligations (fees, fines, tribute, tithes) drive the currency. The ability to impose such obligations is an important aspect of sovereignty; today states alone monopolize this power. This comes from Knapp, Innes, Minsky, and Mosler.

3. Anyone can issue money; the problem is to get it accepted. Anyone can write an IOU denominated in the recognized money of account; but acceptance can be hard to get unless you have the state backing you up. This is Minsky.

4. The word "redemption" is used in two ways -- accepting your own IOUs in payment and promising to convert your IOUs to something else (such as gold, foreign currency, or the state's IOUs).

The first is fundamental and true of all IOUs. All our gold bugs mistakenly focus on the second meaning -- which does not apply to the currencies issued by most modern nations, and indeed does not apply to most of the currencies issued throughout history. This comes from Innes and Knapp, and is reinforced by Hudson's and Grubb's work, as well as by Margaret Atwood's great book: Payback: Debt and the shadow side of wealth .

5. Sovereign debt is different. There is no chance of involuntary default so long as the state only promises to accept its currency in payment. It could voluntarily repudiate its debt, but this is rare and has not been done by any modern sovereign nation.

6. Functional Finance: finance should be "functional" (to achieve the public purpose), not "sound" (to achieve some arbitrary "balance" between spending and revenues). Most importantly, monetary and fiscal policy should be formulated to achieve full employment with price stability. This is credited to Abba Lerner, who was introduced into MMT by Mat Forstater.

In its original formulation it is too simplistic, summarized as two principles: increase government spending (or reduce taxes) and increase the money supply if there is unemployment (do the reverse if there is inflation). The first of these is fiscal policy and the second is monetary policy. A steering wheel metaphor is often invoked, using policy to keep the economy on course. A modern economy is far too complex to steer as if you were driving a car. If unemployment exists it is not enough to say that you can just reduce the interest rate, raise government spending, or reduce taxes. The first might even increase unemployment. The second two could cause unacceptable inflation, increase inequality, or induce financial instability long before they solved the unemployment problem. I agree that government can always afford to spend more. But the spending has to be carefully targeted to achieve the desired result. I'd credit all my Institutionalist influences for that, including Minsky.

7. For that reason, the JG is a critical component of MMT. It anchors the currency and ensures that achieving full employment will enhance both price and financial stability. This comes from Minsky's earliest work on the ELR, from Bill Mitchell's work on bufferstocks and Warren Mosler's work on monopoly price setting.

8. And also for that reason, we need Minsky's analysis of financial instability. Here I don't really mean the financial instability hypothesis. I mean his whole body of work and especially the research line that began with his dissertation written under Schumpeter up through his work on Money Manager Capitalism at the Levy Institute before he died.

9. The government's debt is our financial asset. This follows from the sectoral balances approach of Wynne Godley. We have to get our macro accounting correct. Minsky always used to tell students: go home and do the balances sheets because what you are saying is nonsense. Fortunately, I had learned T-accounts from John Ranlett in Sacramento (who also taught Stephanie Kelton from his own, great, money and banking textbook -- it is all there, including the impact of budget deficits on bank reserves). Godley taught us about stock-flow consistency and he insisted that all mainstream macroeconomics is incoherent.

10. Rejection of the typical view of the central bank as independent and potent. Monetary policy is weak and its impact is at best uncertain -- it might even be mistaking the brake pedal for the gas pedal. The central bank is the government's bank so can never be independent. Its main independence is limited to setting the overnight rate target, and it is probably a mistake to let it do even that. Permanent Zirp (zero interest rate policy) is probably a better policy since it reduces the compounding of debt and the tendency for the rentier class to take over more of the economy. I credit Keynes, Minsky, Hudson, Mosler, Eric Tymoigne, and Scott Fullwiler for much of the work on this.

That is my short list of what MMT ought to include. Some of these traditions have a very long history in economics. Some were long lost until we brought them back into discussion. We've integrated them into a coherent approach to Macro. In my view, none of these can be dropped if you want a macroeconomics that is applicable to the modern economy. There are many other issues that can be (often are) included, most importantly environmental concerns and inequality, gender and race/ethnicity. I have no problem with that.

Hilary Barnes , October 2, 2018 at 3:01 am

Out of my depth: "7. For that reason, the JG is a critical component of MMT." The JG?

BillC , October 2, 2018 at 3:07 am

Job guarantee (especially as distinguished from a basic income guarantee). See here for fairly recent coverage by Lambert.

Epistrophy , October 2, 2018 at 6:16 am

I had exactly the same question. Thank you.

skippy , October 2, 2018 at 7:04 am

A JG is to discontinue NAIRU or structural under-unemployment with attendant monetarist/quasi inflation views. Something MMT has be at pains to point out wrt fighting a nonexistent occurrence due to extended deflationary period.

dcrane , October 2, 2018 at 5:31 am

The paragraph on "double entry book-keeping" is also a bit too inside-baseball. Otherwise I enjoyed the essay.

PlutoniumKun , October 2, 2018 at 6:11 am

Yup, he lost me on quadruple entry book-keeping, thats the first time I ever heard of that concept.

Quanka , October 2, 2018 at 8:02 am

Its double entry accounting counting both sides of the equation. Fed deposits money into bank requires 4 entries, a double entry for the Fed and for the bank. Typical double entry accounting only looks at the books of 1 entity at a time. Quadruple Entry accounting makes the connection between the government monetary policy and private business accounting. I'm not an accountant, I may have butchered that.

todde , October 2, 2018 at 12:15 pm

that's pretty much it

Peter Pan , October 2, 2018 at 1:37 pm

Does Steve Keen's "Minsky" program utilize quadruple-entry bookkeeping?

Todde , October 2, 2018 at 1:47 pm

Double entry

Grebo , October 2, 2018 at 3:12 pm

Yes it does. Double entry for each party to the transaction.

todde , October 2, 2018 at 3:29 pm

you are right – it does give each parties transactions.

horostam , October 2, 2018 at 8:43 am

think about banks and reserves, your money is on the bank's liability side (and your asset), while the reserves are on the bank's asset side (and gov't or fed's liability.)

i think its the reserves that quadruple it, reserves are confusing because when you move $5 from a bank account to buy ice cream its not just one copy of the $5 that moves between checking accounts, there is another $5 that moves "under the hood" so to speak in reserve world

HotFlash , October 2, 2018 at 12:10 pm

Very briefly, double entry bookkeeping keeps track of how money comes in/out, and where it came from/went. Cash is the determining item (although there may be a few removes). Hence, say I buy a $20 dollar manicure from you. I record my purchase as "Debit (increase) expense: manicure $20, credit (decrease) cash, $20". Bonus! If my bookkeeping is correct, my debits and credits are equal and if I add them up (credits are minus and debits are plus) the total is zero – my books "balance". So, double-entry bookkeeping is also a hash-total check on my accounting accuracy. But I digress.

On your books, the entry would be "Debit (increase) cash $20, credit (decrease) sales, $20".

So, your double-entry book plus my double-entry books would be quadruple-entry accounting.

JCC , October 2, 2018 at 9:40 am

#7 was my immediate stopper, too. It drives me nuts when people introduce 2-3-4 letter acronyms with no explanation (I work for the DoD and I'm surrounded by these "code words". I rarely know what people are talking about and when I ask, the people talking rarely know what these TLAs – T hree L etter A cronyms – stand for either!).

Next question regarding #7: What is ELR?

Other than #7, I really appreciate this article. NC teaches and/or clarifies on a daily basis.

Mel , October 2, 2018 at 10:11 am

Employer of Last Resort? (Wikipedia)

Matthew Platte , October 2, 2018 at 11:29 am

DoD?

JCC , October 2, 2018 at 2:45 pm

Guilty as charged :-)

For non-US readers, DoD is D epartment o f D efense, the undisputed-by-many home of TLAs.

lyman alpha blob , October 2, 2018 at 3:10 pm

Ha! I really love this blog.

somecallmetim , October 2, 2018 at 12:51 pm

NC?

;)

Bill C , October 2, 2018 at 3:02 am

Thank you for this post!

This quick, entertaining read is IMHO nothing less than a "Rosetta Stone" that can bring non-specialists to understand MMT: not just how , but why it differs from now-conventional neoliberal economics. I hope it finds a wide readership and that its many references to MMT's antecedents inspire serious study by the unconvinced (and I hope they don't take Wray's invitation to skip the 10 bullet points).

This piece is a fine demonstration of why I've missed Wray as he seemed to withdraw from public discourse for the last few years.

HotFlash , October 2, 2018 at 12:14 pm

No no! He said "Many readers might want to skip to the bullet points near the end, which summarize what I include in MMT."

el_tel , October 2, 2018 at 4:55 am

Thank you! The (broad) analogies with my own experience are there. I had a decidedly "mainstream" macro education at Cambridge (UK); though many of the "old school" professors/college Fellows who, although not MMT people as we'd currently understand (or weren't at *that* stage – Godley lectured a module I took but this was in the early 1990s) were still around, in hindsight the "university syllabus" (i.e. what you needed to regurgitate to pass exams) had already steered towards neoliberalism. I never really understood why I never "got" macro and it was consistently my weakest subject.

It was later, having worked in the City of London, learned accountancy in my actuarial training, and then most crucially starting reading blogs from people who went on to become MMT leading lights, that I realised the problem wasn't ME, it was the subject matter. So I had to painfully unlearn much of what I was taught and begin the difficult process of getting my head around a profoundly different paradigm. I still hesitate to argue the MMT case to friends, since I don't usually have to hand the "quick snappy one liners" that would torpedo their old discredited understanding.

I'm still profoundly grateful for the "old school" Cambridge College Fellows who were obviously being sidelined by the University and who taught me stuff like the Marxist/Lerner critiques, British economic history, political economy of the system etc. Indeed whilst I had "official" tutorials with a finance guy who practically came whenever Black-Scholes etc was being discussed, an old schooler was simultaneously predicting that it would blow the world economy up at some point (and of course he was in the main , correct). I still had to fill in some gaps in my knowledge (anthropology was not a module, though Marxist economics was), with hindsight I appreciate so much more of what the "old schoolers" said on the sly during quiet points in tutorials – Godley being one, although he wasn't ready at that time to release the work he subsequently published and was so revolutionary. Having peers educated elsewhere during my Masters and PhD who knew nothing of the subjects that – whilst certainly not the "key guide" to "proper macro" described in the article – began to horrify me later in my career.

skippy , October 2, 2018 at 5:07 am

Thanks for your efforts Mr Wray, your provide a rich resource to familiarize most and in some cases refute doctrinaire attitudes. Kudos.

BTW completely agree with the perspective against PR marketing of the topic or individuals wrt MMT or PK.

Lambert Strether , October 2, 2018 at 5:23 am

This is really great. Thanks a ton, as Yves would say.

I know I have used to "rock star" metaphor on occasion, so let me explain that to me what is important in excellent (i.e., live) rock and roll is improvisational interplay among the group members -- the dozen or so who understood MMT in the beginning, in this case -- who know the tune, know each other, and yet manage to make the song a little different each time. It's really spectacular to see in action. Nothing to do with spotlights, or celebrity worship, or fandom!

DavidEG , October 2, 2018 at 5:54 am

I'm no MMT expert, but I think this article does a good job of juxtaposing MMT with classic (non-advanced) macroeconomics. I quote:

In the language of Tinbergen (1952), the debate between MMT and mainstream macro can be thought of as a debate over which instrument should be assigned to which target. The consensus assignment is that the interest rate, under the control of an independent central bank, should be assigned to the output gap target, while the fiscal position, under control of the elected budget authorities, should be assigned to the debt sustainability target. [ ] The functional finance assignment is the reverse -- the fiscal balance under the budget authorities is assigned to the output target, while any concerns about debt sustainability are the responsibility of the monetary authority.

What about interest rate fixing? The central bank would remain in charge of that, but in an MMT context this instrument would lose most of its relevance:

[W]hile a simple swapping of instruments and targets is one way to think about functional finance, this does not describe the usual MMT view of how the policy interest rate should be set. What is generally called for, rather, is that the interest rate be permanently kept at a very low level, perhaps zero. In an orthodox policy framework, of course, this would create the risk of runaway inflation; but keep in mind that in the functional framework, the fiscal balance is set to whatever level is consistent with price stability.

It may be a partial reconstruction of MMT, but to me this seems to be a neat way to present MMT to most people. Saying that taxes are there just to remove money from the economy or to provide incentives is a rather extreme statement that is bound to elicit some fierce opposition.

Having said that, I've never seen anyone address what I think are two issues to MMT: how to make sure that the power to create money is not exploited by a political body in order to achieve consensus, and how to assure that the idea of unlimited monetary resources do not lead to misallocation and inefficiencies (the bloated, awash-with-money US military industry would probably be a good example).

larry , October 2, 2018 at 6:14 am

The best comparison of MMT with neoliberal neoclassical economics, in my view, is Bill Mitchell's blog post, "How to Discuss Modern Monetary Theory" ( http://bilbo.economicoutlook.net/blog/?p=25961 ). I especially recommend the table near the end as a terrific summary of the differences between the mainstream narrative and MMT.

el_tel , October 2, 2018 at 8:53 am

Thanks! I have enormous respect for Mitchell, given the quantity and quality of his blogging. However, my only nitpick is that a lot of his blog entries are quite long and "not easily digestible". I have long thought that one of those clever people who can do those 3 minute rapid animation vids we see on youtube is needed to "do a Lakoff" and change the metaphors/language. But this post of Mitchell (which I missed, since I don't read all his stuff) is, IMHO, his best at "re-orienting us".

kgw , October 2, 2018 at 11:15 am

I get this "http's server IP address could not be found." I'll try, gasp, googling it

el_tel , October 2, 2018 at 11:24 am

FWIW I mucked around with the link in Firefox (although I typically use Opera, which gave me that same error) and could read it.

Epistrophy , October 2, 2018 at 6:34 am

Saying that taxes are there just to remove money from the economy or to provide incentives is a rather extreme statement that is bound to elicit some fierce opposition.

Yes this is a frightening statement. The power to tax is the power to destroy. If this is a foundation point of the proposal then

Having said that, I've never seen anyone address what I think are two issues to MMT: how to make sure that the power to create money is not exploited by a political body in order to achieve consensus, and how to assure that the idea of unlimited monetary resources do not lead to misallocation and inefficiencies (the bloated, awash-with-money US military industry would probably be a good example).

Bingo. My thoughts exactly. Too much power in the hands of the few. Easy to slide into Orwell's Animal Farm – where some people are more equal than others.

MMT is based upon very good intentions but, in my view, there is a moral rot at the root of the US of A's problems, not sure this can be solved by monetary policy and more centralized control.

And the JG? Once the government starts to permanently guarantee jobs

skippy , October 2, 2018 at 7:12 am

I suggest you delve into what is proposed by the MMT – PK camp wrt a JG because its not centralized in the manner you suggest. It would be more regional and hopefully administrated via social democratic means e.g. the totalitarian aspect is moot.

I think its incumbent on commenters to do at least a cursory examination before heading off on some deductive rationalizations, which might have undertones of some book they read e.g. environmental bias.

Epistrophy , October 2, 2018 at 7:38 am

Skippy, I read the article, plus the links, including those links of the comments. I will admit that I am a little more right of center in my views than many on the website.

The idea is interesting, but the administration of such a system would require rewriting the US Constitution, or an Amendment to it if one thinks the process through, would it not? I think of the Amendment required to create the Federal Reserve System when I say this.

skippy , October 2, 2018 at 7:45 am

I think WWII is instructive here.

Clive , October 2, 2018 at 7:58 am

One thing I really don't like at all -- and I've crossed swords with many over this -- is that we do tend to take (not just in the US, this is prevalent in far too many places) things like the constitution, or cultural norms, or traditions or other variants of "that's the way we've always done this" and elevate them to a level of sacrosanctity.

Not for one moment am I suggesting that we should ever rush into tweaking such devices lightly nor without a great deal of analysis and introspective consultations.

Constitutions get amended all the time. The Republic of Ireland changed its to renounce a territorial claim on Northern Ireland. The U.K. created a right for Scotland to secede from the Union. There's even a country in Europe voting whether to formally change its name right now. Britain "gave up" its empire territories (not, I would add speedily, without a lot of prodding, but still, we got there in the end). All of which were, at one time or another, "unthinkable". Even the US, perhaps the most inherently resistant to change country when it thinks it's being "forced" to do so, begrudgingly acknowledged Cuba.

If something is necessary, it should be done.

vlade , October 2, 2018 at 8:06 am

Human laws (any and all, for simplicity I include culture, customs etc.. here) are not laws of nature.

They change over time to survive. The easy way, or the hard way.

Or they don't survive at all, that's an option too.

witters , October 2, 2018 at 9:09 am

"Human laws (any and all, for simplicity I include culture, customs etc.. here) are not laws of nature."

Wave Function Collapse?

voteforno6 , October 2, 2018 at 8:14 am

Why would a jobs guarantee require a constitutional amendment? The federal government creates jobs all the time, with certain defined benefits. This would merely expand upon that, to potentially include anyone who wants a job.

Epistrophy , October 2, 2018 at 8:26 am

I was thinking of implementing the whole concept of MMT, of which the JG is but one part, with this statement. Perhaps I did not make that clear.

voteforno6 , October 2, 2018 at 8:36 am

There are a couple different aspects of this that people are getting mixed together, I think. The core of MMT is not a proposal for government to implement. Rather, it is simply a description of how sovereign currencies actually operate, as opposed by mainstream economics, which has failed in this regard. In other words, we don't need any new laws to implement MMT – we need a paradigm shift.

The Jobs Guarantee is a policy proposal that flows from this different paradigm.

skippy , October 2, 2018 at 3:16 pm

It has been stated many times that it is to inform policy wrt to potential and not some booming voice from above dictating from some ridged ideology.

Persoanly as a capitalist I can't phantom why anyone would want structural under – unemployment. Seems like driving around with the hand brake on and then wondering why performance is restricted or parts wear out early.

todde , October 2, 2018 at 4:37 pm

Power.

I want 12 people lined up at the door to take your job, and then you will know where the power lies

Carla , October 2, 2018 at 11:18 am

Re-writing the U.S. Constitution is something people think about and talk about all the time, FYI.

todde , October 2, 2018 at 1:08 pm

the Amendment required to create the Federal Reserve System

What Amendment was that?

And since the Constitution gives Congress the power to coin money I am unaware of any reason an amendment would be necessary.

Epistrophy , October 2, 2018 at 3:43 pm

Thinking of the Federal Reserve Act being enabled by the Federal Income Tax of the 16th Amendment.

Using Federal taxes to fund the JG; I do not think that this aspect of it (and others) would survive a Constitutional challenge. Therefore ultimately an Amendment might be needed.

Then again I may be wrong. Technically Obamacare should have been implemented by an Amendment were strict Constitutional law applied.

Rights to health care and jobs are not enumerated in either the Constitution or Bill of Rights, as far as I am aware.

todde , October 2, 2018 at 4:05 pm

16th Amendment had nothing to do with the Federal Reserve.

And I think you are confusing 'you must buy health insurance or face a tax", with "You have a right to have healthcare".

If the government forced you to work, you may have a case.

There are 3 things the feds can spend federal funds on, pay debt, provide for the common defense, and the general welfare clause.

The General Welfare clause has been interpreted very widely in regards to Government spending.

New Deal, Social Security, Medicare/aid all survived court challenges, or if they lost, they lost on regulatory issues, and not 'spending' issues

Epistrophy , October 2, 2018 at 7:28 am

Not opposed to some of the principles of MMT, just don't understand, in this modern age where effectively all currency is electronic digits in a banking computer system, the issue of a currency must be tied to taxes. In years past, where currency was printed and in one's pocket, or stuffed under a mattress, or couriered by stagecoach, then yes – taxes would be needed. But today can we not just print (electronically) the cash needed for government operations each year based upon a fixed percentage of private sector GDP? Why therefore do we need government debt? Why do we need an income tax?

skippy , October 2, 2018 at 7:37 am

A. GDP is non distributional.

B. Had taxation not been promoted as theft in some camps Volcker would have not had to jack IR to such a upper bound during the Vietnam war.

C. Government Debt allocated to socially productive activities is a long term asset with distributional income vectors.

D. Ask the Greeks.

Epistrophy , October 2, 2018 at 7:48 am

Skippy, I have lived and worked in countries without income tax (but instead indirect tax) and where government operating revenue was based upon a percentage of projected national revenue. I have been involved in the administration of such budgets.

I am in favor of government spending, or perhaps more accurately termed investing, public money on long-term, economically beneficial projects. But this is not happening. The reality is that government priorities can easily be hijacked by political interests, as we currently witness.

larry , October 2, 2018 at 7:58 am

While I agree that political highjacking is possible and must be dealt with, this is not strictly speaking part of an economic theory, which is what MMT is. While MMT authors may take political positions, the theory itself is politically neutral.

Income taxes, tithes, or any other kind of driver is what drives the monetary circuit. Consider it from first principles. You have just set up a new government with a new currency where this government is the monopoly issuer. No one else has any money yet. So, the government must be the first spender. However, how is this nascent government going to motivate anyone to use this new currency? Via taxation, or like means, that can only be met by using the national currency, whatever form that currency may take, marks on a stick, paper, an entry in a ledger, or the like.

Epistrophy , October 2, 2018 at 8:34 am

Thank you for this explanation. I understand that, for example, this is why the Federal Reserve Act of 1913, I believe, created the Federal Reserve and Federal Income Tax at the same time.

But the US economy functioned adequately, survived a civil war, numerous banking crises, experienced industrialization, national railways, etc without a central bank or federal income tax from the 1790's to 1913.

To me, the US's state of perpetual war is enabled by Federal Income Tax. Without it the MIC would collapse, I am certain.

John k , October 2, 2018 at 10:31 am

Functioned adequately
During the 150 yr hard money period we had recessions/depressions that we're both far more frequent (every three years) and on avg far deeper than what we have had since fdr copied the brits and took us off the gold standard. Great deprecession was neither the longest or deepest.
Two reasons
Banks used to fail frequently, a run on one bank typically leading to runs on other banks, spreading across regions like prairie fires if your bank failed you lost all your money. Consequences were serious.
During GR so many banks failed in the Midwest, leading to farm foreclosures, the region was near armed insurrection in 1932. Fiat meant that the fed can supply unlimited liquidity. Since then banks have failed but immediately taken over by another. Critically, no depositor has lost a penny, even those with far more exposed than the deposit insurance limit. No runs on us banks since 1933.
Second, we now have auto stabilizers, spending continues during downturns because gov has no spending limit. Note previously in an emergency gov borrowed. 10 mil from J.P. Morgan.

Brian , October 2, 2018 at 11:30 am

But at what cost? no depositor loses money, yet huge amounts are required to be printed, thus devaluing the "currency". So is the answer inflation that must by necessity become hyperinflation?
I don't understand why it is important to protect a bank vs. making it perform its function without risking collapse. This is magical thinking as we have found very few banks in this world not ready and willing to pillage their clients, be it nations or just the little folk.
Why would anyone trust a government to do the right thing by its population? When has that ever worked out in favor of the people?
I can not understand the trust being demanded by this concept. It wants trust for the users, but in no way can it expect trust or virtue from the issuer of the "currency"

also, I can't help but think MMT is for growth at all costs. Hasn't the growth shown that it is pernicious in itself? Destroy the planet for the purpose of stabilizing "currency".

Our federal reserve gave banks trillions of dollars, and then demanded they keep much of it with the Fed and are paid interest not to use it. It inflated the "currency" in circulation yet again and now it is becoming clear a great percentage of people in our country can no longer eat, no longer purchase medications, a home, a business

If being on a hard money system as we were causes recessions and depressions, would we find that it was a natural function to cut off the speculators at their knees?

How does MMT promote and retain value for the actual working and producing people that have no recourse with their government? I would like to read about what is left out of this monumental equation.

TroyMcClure , October 2, 2018 at 12:10 pm

Money is not a commodity and does not "lose value" the more of it there is.

todde , October 2, 2018 at 12:57 pm

we used to protect the banks depositors and the government put the the bank in receivership.

That went away in the 21st century for some reason.

Now we protect the bank and put the Government in receivership (Greece).

todde , October 2, 2018 at 12:08 pm

Some points:

US had a federal income tax during the civil war and for a decade or so after.

I have always assumed that mass conscription and the Dreadnought arms race led to the implementation of the modern taxing/monetary system. (gov't needed both warfare and welfare)

Taxes, just as debt, create an artificial demand for currency as one must pay back their taxes in {currency}, and one must pay back debt in {currency}. It doesn't have to be an income tax, and I think a sales tax would be a better driver of demand than an income tax.

The US had land sales that helped fund government expenditures in the 1800s.

HotFlash , October 2, 2018 at 12:32 pm

Not all taxes are income taxes. Back in the day (20's/30's/40's),my grandfather could pay off the (county) property taxes on his farm by plowing snow for the county in the winter -- and he was damned careful to make sure that the county commissioners' driveways were plowed out as early as possible after a storm.

In the 30's/40's the property tax laws were changed to be payable only in dollars.

So Grandpa had to make cash crops. Things changed and money became necessary.

Benjamin Wolf , October 2, 2018 at 7:44 am

But today can we not just print (electronically) the cash needed for government operations each year based upon a fixed percentage of private sector GDP?

The élites could, but it would be totally undemocratic and the economics profession's track record of forecasting growth is no better than letting a cat choose a number written on an index card.

Why therefore do we need government debt?

There is no government debt. It's just a record of interest payments Congress has agreed to make because the wealthy wanted another welfare program.

Why do we need an income tax?

The only logically consistent purpose is because people have too much income.

voteforno6 , October 2, 2018 at 8:19 am

I think the point they're driving at, is that by requiring the payment of taxes in a particular currency, a government creates demand for that currency. There are other uses for federal taxes, not the least of which is to keep inflation in check.

Government debt is not needed, at least not at the federal level. My understanding of it is that it's a relic from the days of the gold standard. It's also very useful to some rather large financial institutions, so eliminating it would be politically difficult.

WobblyTelomeres , October 2, 2018 at 9:23 am

Wray has said in interviews that the debt (and associated treasury bonds), while not strictly necessary in a fiat currency, is of use in that it provides a safe base for investment, for pensioners and retirees, etc.

Sure, it could be eliminated by (a) trillion dollar platinum coins deposited at the Federal Reserve followed by (b) slowly paying off the existing debt when the bonds mature or (c) simply decreeing that the Fed must go to a terminal and type in 21500000000000 as the US Gov account balance (hope I got the number of zeroes correct!).

It could be argued that the US doesn't strictly need taxes to drive currency demand as long as our status as the world reserve currency is maintained (see oft-discussed petrodollar, Libya, etc). If that status is imperiled, say by an push by a coalition of nations to establish a different currency as the "world reserve currency") taxes would be needed to drive currency demand.

I think most of this is covered in one way or another here:

http://neweconomicperspectives.org/modern-monetary-theory-primer.html

HotFlash , October 2, 2018 at 12:39 pm

Government debt is not actually a 'real thing'. It is a residue of double-entry bookkeeping, as is net income (income minus expenses, that's a credit in the double-entry system). It could as well be called 'retained earnings (also a 'book' credit in the double-entry system). If everybody had to take bookkeeping in high school there would be far few knickers in knots!

Todde , October 2, 2018 at 3:10 pm

Its real if you pay an interest rate on it

Grebo , October 2, 2018 at 3:48 pm

There are two kinds of government 'debt': the accumulated deficit which is the money in circulation not a real debt, and outstanding bonds which is real in the sense that it must be repaid with interest.

However, the government can choose the interest rate and pay it (or buy back the bonds at any time) with newly minted money at no cost to itself, cf. QE.

Neither kind warrant bunched panties.

todde , October 2, 2018 at 4:39 pm

no panties bunched.

horostam , October 2, 2018 at 8:51 am

seems to me that the guaranteed jobs would be stigmatized, and make it harder for people to get private sector jobs. "once youre in the JG industry, its hard to get out" etc.

how much of a guarantee is the job guarantee supposed to be? ie. at what point can you get fired from a guaranteed job?

Epistrophy , October 2, 2018 at 9:31 am

Yes, my mind wandered into the same territory. While I agree that something needs to be done, it also has the potential to strike at the heart of a lean, merit-based system by introducing another layer of bureaucracy. In principle, I am not against the idea, but as they say, "God (or the Devil – take your pick) is in the details ".

The Rev Kev , October 2, 2018 at 9:48 am

Is there any point in working for a jobs guarantee when the only sort of jobs that would probably be guaranteed would be MacJobs and Amazon workers?

Newton Finn , October 2, 2018 at 11:23 am

If you haven't already read it, "Reclaiming the State" by Mitchell and Fazi (Pluto Press 2017) provides a detailed and cogent analysis of how neoliberalism came into ascendency, and how the principles of MMT can be used to pave the way to a more humane and sustainable economic system. A new political agenda for the left, drawing in a different way upon the nationalism that has energized the right, is laid out for those progressives who understand the necessity of broadening their appeal. And the jobs guarantee that MMT proposes has NOTHING to do with MacJobs and Amazon workers. It has to do with meeting essential human and environmental needs which are not profitable to meet in today's private sector.

HotFlash , October 2, 2018 at 12:51 pm

Job guarantee, or govt as employer of last resort -- now there is a social challenge/opportunity if there ever was one.

Well managed, it would guarantee a living wage to anyone who wants to work, thereby setting a floor on minimum wages and benefits that private employers would have to meet or exceed. These minima would also redound to the benefit of self-employed persons by setting standards re income and care (health, vacations, days off, etc) *and* putting money in the pockets of potential customers.

Poorly managed it could create the 'digging holes, filling them in' programs of the Irish Potato Famine ore worse (hard to imagine, but still ). It has often been remarked that the potato blight was endemic across Europe, it was only a famine in Ireland -- through policy choices.

So, MMT aside (as being descriptive, rather than prescriptive), we are down to who controls policy. And that is *really* scary.

Todde , October 2, 2018 at 3:11 pm

Government job guarantees is an idea as old as the pyramids.

Frankly so is mmt

Mel , October 2, 2018 at 11:34 am

In terms of power, the government has the power to shoot your house to splinters, or blow it up, with or without you in it. We say they're not supposed to, but they have the ability, and it has been done.
The question of how to hold your government to the things it's supposed to do applies to issues beyond money. We'd best deal with government power as an issue in itself. I should buckle down and get Mitchell's next-to-newest book Reclaiming the State .

HotFlash , October 2, 2018 at 12:56 pm

Ding ding ding!

Grebo , October 2, 2018 at 3:23 pm

Bill Mitchell was not too impressed with the INET paper: Part 1 .
There's three parts! Mitchell rarely has the time to be brief.

Tinky , October 2, 2018 at 6:02 am

I don't claim to fully understand MMT yet, but I find Wray's use of the derogatory term "gold bugs" to be both disappointing and revealing. To lump those, some of whom are quite sophisticated, who believe that currencies should be backed by something of tangible value (and no, "the military" misses the point), or those who hold physical gold as an insurance policy against political incompetence, and the inexorable degradation of fiat currencies, in with those who promote or hold gold in the hopes of hitting some type of lottery, is disingenuous at best.

Wukchumni , October 2, 2018 at 7:06 am

OMT seemingly has no reason to exist being old school, but for what it's worth, the almighty dollar has lost over 95% of it's value when measured against something that matters, since the divorce in 1971.

I found this passage funny, as in flipping the dates around to 1791, is when George Washington set an exchange rate of 1000-1 for old debauched Continental Currency, in exchange for newly issued specie. (there was no Federal currency issued until 1861)

So yeah, they burned all of their tax revenue, because the money wasn't worth jack.

Farley Grubb -- the foremost authority on Colonial currency -- proved that the American colonists understood perfectly well that taxes drive money. Every Act that authorized the issue of paper money imposed a Redemption Tax. The colonies burned all their tax revenue.

skippy , October 2, 2018 at 7:30 am

Gold bug is akin to money crank e.g. money = morals. That's not to mention all the evidence to date does not support the monetarist view nor how one gets the value into the inanimate object or how one can make it moral.

Benjamin Wolf , October 2, 2018 at 8:01 am

Gold doesn't historically perform as a hedge but as a speculative trade. Those who think it can protect them from political events typically don't realize that a gold standard means public control of the gold industry, thereby cutting any separation from the political process off at the knees.

When a government declares that $20 is equal in value to one ounce of gold, it also declares an ounce of gold is equal to $20 dollars. It is therefore fixing, through a political decision subject to political changes, the price of the commodity.

Tinky , October 2, 2018 at 9:44 am

Nonsense. When fiat currencies invariably degrade, and especially at a fast rate, gold has proven to be a relative store of value for millennia . All one need do is to look at Venezuela, Argentina, Turkey, etc., to see that ancient dynamic in action today.

You, and others who have replied to my comment, are using the classical gold standard as a straw man, as well. Neither I, nor many other gold "bugs" propose such a simple solution to the obviously failed current economy, which is increasingly based on mountains of debt that can never be repaid.

WobblyTelomeres , October 2, 2018 at 9:48 am

gold has proven to be a relative store of value for millennia.

As long as one is mindful that gold is just another commodity, subject to the same speculative distortions as any other commodity (see Hunt brothers and silver).

Tinky , October 2, 2018 at 9:54 am

But that is obviously false, given that no other commodity has remotely performed with such stability over such a long period of time.

It is true that over short periods distortions can appear, and the *true* value of gold has been suppressed in recent years through the use of fraudulent paper derivatives. But again, I'm not arguing for the return of a classical gold standard.

Wukchumni , October 2, 2018 at 10:13 am

The only way the gold standard returns, is if it's forced on the world on account of massive fraud in terms of fiat money, but that'll never happen.

WobblyTelomeres , October 2, 2018 at 10:56 am

Tinky:

I'm curious as to what you consider the "*true* value of gold". Could you elaborate?

I'm dense/obtuse and thus not an economist!

Tinky , October 2, 2018 at 11:18 am

Don't worry, I'm likely to be at least equally dense!

I didn't mean to suggest that there is some formula from which a *true* value of precious metals might be derived. I simply meant that gold has clearly been the object of price suppression in recent years through the use of paper derivatives (i.e. future contracts). The reason for such suppression, aside from short-term profits to be made, is that gold has historically acted as a barometer relating to political and economic stability, and those in power have a particular interest in suppressing such warning signals when the system becomes unstable.

So, while the Central Banks created previously unimaginable mountains of debt, it was important not to alarm the commoners.

The suppression schemes have become less effective of late, and will ultimately fail when the impending crisis unfolds in earnest.

Wukchumni , October 2, 2018 at 10:00 am

As long as one is mindful that gold is just another commodity, subject to the same speculative distortions as any other commodity

It sounds good in theory, but history says otherwise.

The value remained more or less the same for well over 500 years as far as an English Pound was concerned, the weight and value of a Sovereign hardly varied, and the exact weight and fineness of one struck today or any time since 1817, is the same, no variance whatsoever.

Thus there was no speculative distortions in terms of value, the only variance being the value of the Pound (= 1 Sovereign) itself.

https://en.wikipedia.org/wiki/Sovereign_(British_coin)

Benjamin Wolf , October 2, 2018 at 12:23 pm

When fiat currencies invariably degrade, and especially at a fast rate, gold has proven to be a relative store of value for millennia.

Currencies do not degrade. Political systems degrade.

Bridget , October 2, 2018 at 8:25 am

" who believe that currencies should be backed by something of tangible value"

As I understand it, MMT also requires that currency be backed by something of tangible value: a well managed and productive economy. It doesn't matter in the least if your debt is denominated in your own currency if you have the economy of Zimbabwe.

Tinky , October 2, 2018 at 9:48 am

Sounds reasonable in theory, but that was supposed to be the case with the current economic system, as well, and we can all see where that has led.

I'm not arguing that there isn't a theoretically better way to create and use "modern" money, but rather doubt that those empowered to create it out of thin air will ever do so without abusing such power.

Bridget , October 2, 2018 at 10:10 am

Oh, I agree with you. In no universe that I am aware of would the temptation to create money beyond the productive capacity of the economy to back it up be resisted. I think Zimbabwe is a pretty good example of where the theory goes in practice.

TroyMcClure , October 2, 2018 at 12:20 pm

That's exactly wrong. Zimbabwe had a production collapse. Same amount of money to buy a much smaller amount of goods. The gov responded not by increasing goods, but increasing money supply.

Bridget , October 2, 2018 at 1:30 pm

Maybe because the economy did not have the productive capacity to increase goods? It takes more than a magic wand and wishful thinking.

voteforno6 , October 2, 2018 at 8:29 am

Mark Blyth has a good discussion of the gold standard in his book Austerity: The History of a Dangerous Idea . He makes the point that, in imposing the adjustments necessary to keep the balance of payments flowing, the measures imposed by a government would be so politically toxic, that no elected official in his or her right mind would implement them, and expect to remain in office. In short, you can have either democracy, or a gold standard, but you can't have both.

Also, MMT does recognize that there are real world constraints on a currency, and that is represented by employment, not some artificially-imposed commodity such as gold (or bitcoin, or seashells, etc). The Jobs Guarantee flows out of this.

Tinky , October 2, 2018 at 9:50 am

As mentioned above, you, among others who have replied to my original comment, are using the classical gold standard as a straw manl. Neither I, nor many other gold "bugs", propose such a simple solution for the failed current economic system, which is increasingly based on mountains of debt that can never be repaid.

WobblyTelomeres , October 2, 2018 at 11:35 am

increasingly based on mountains of debt that can never be repaid.

Huh? I listed two ways they could be repaid above. In the US, the national debt is denominated in dollars, of which we have an infinite supply (fiat). In addition, the Federal Reserve could buy all the existing debt by [defer to quad-entry accounting stuff from Wray's primer] and then figuratively burn it. Sure, the rest of the world would be pissed and inflation *may* run amok, but "can never" is just flat out wrong.

Tinky , October 2, 2018 at 1:59 pm

Of course it can be extinguished through hyperinflation. I didn't think that it would be necessary to point that out. No "may" about it, though, as if the U.S. prints tens of trillions of dollars to extinguish the debt, hyperinflation will be assured.

todde , October 2, 2018 at 2:14 pm

not if it would be done over time, as the debt comes due.

We could also tax the excess dollars from the system with a large capital gains tax rate.

todde , October 2, 2018 at 3:04 pm

so I don't believe there will be a hyper-inflation of goods, but in asset prices. That is why I would raise the capital gains rate.

The failure of MMT is when the hyper-inflation occurs in goods and services.

Taxing a middle class person while his cost of living is rising will be a tough political act to do.

WobblyTelomeres , October 2, 2018 at 2:19 pm

I didn't think that it would be necessary to point that out.

Sorry, but I'm an old programmer; logic rules the roost. When one's software is expected to execute billions of times a day without fail for years (and this post is very likely routed through a device running an instance of something I've written). Always means every time, no exceptions; never means not ever, no matter what.

You said never.

Tinky , October 2, 2018 at 3:30 pm

Yes I did. I was simply being lazy, as I typically do add "except via hyperflation", when discussing debts that can only be repaid in that manner.

That "solution" is obviously no solution at all, as it would lead to chaos.

Interpret it any way that you wish.

todde , October 2, 2018 at 11:37 am

So what is the new solution proposed by 'gold bugs'?

Tinky , October 2, 2018 at 2:06 pm

I'm sure that there is no one solution proposed, though an alternative to the current system which seems plausible would be a currency backed by a basket of commodities, including gold.

todde , October 2, 2018 at 2:26 pm

and when commodity prices fluctuate you will still have government printing and eliminating money to maintain the price.

I would say, if that was the argument, stick to gold as it is one of the more stable commodities.

AlexHache , October 2, 2018 at 11:43 am

Can I ask what your solution would be? I don't think you've mentioned it.

HotFlash , October 2, 2018 at 1:08 pm

Hi Tinky, much late but still. Gold will have value as long as people believe it has value. But what will they trade it for? The bottom line is your life.

I don't have any gold, too expensive, and it really has no use. But I remember Dimitri Orlov's advice : I am long in needles, pins, thread, nails and screws, drill bits, saws, files, knives, seeds, manual tools of many sorts, mechanical skills and beer recipes. Plus I can sing.

Bridget , October 2, 2018 at 1:31 pm

Don't forget a nice supply of 30 year old single malt scotch!

Tinky , October 2, 2018 at 2:04 pm

The vast majority of people who hold physical gold are well aware of the value of having skills and supplies, etc., in case of a serious meltdown. But it's not a zero-sum game, as you suggest. Gold will inexorably rise sharply in value when today's fraudulent markets crash, and there will be plenty of opportunities for those who own it to trade it for other assets.

Furthermore, as previously mentioned, gold's utility is already on full display, to those who are paying attention, and not looking myopically through a USD lens.

Wukchumni , October 2, 2018 at 2:19 pm

Why not the GOILD standard?, one mineral moves everything, while the other just sits around gathering dust, after being extracted.

David Swan , October 2, 2018 at 2:28 pm

"Mountains of debt that can never be repaid" is a propaganda statement with no reference to any economic fact. Why do you feel that this "debt" needs to be "repaid"? It is simply an accounting artifact. The "debt" is all of the dollars that have been spent *into* the economy without having been taxed back *out*. The word "debt" activates your feels, but has no intrinsic meaning in this context. Please step back from your indoctrinated emotional reaction and understand that the so-called national "debt" is nothing more than money that has been created via public spending, and "repaying" it would be an act of destruction.

WobblyTelomeres , October 2, 2018 at 3:27 pm

THIS!!!

I keep telling (boring, annoying, infuriating) people that, in the simplest terms, the national debt is the money supply and they won't grasp that simple declaration. When I said it to my Freedom Caucus congress critter (we were seated next to each other on an exit aisle) his head started spinning, reminding me of Linda Blair in The Exorcist.

Tinky , October 2, 2018 at 3:44 pm

The debt may not have to be repaid, but the interest does have to be serviced. Good luck with that in the long run.

WobblyTelomeres , October 2, 2018 at 4:18 pm

As I said to my congress critter, if the debt bother's y'all so much, why not just pay it off, dust off your hands, and be done with it?

Personally, if I were President for a day, I'd have the mint stamp out 40 or so trillion dollar platinum coins just to fill the top right drawer of the Resolute desk. Would give me warm fuzzy feelings all day long.

p.s. I also told him that the man with nothing cares not about inflation. He didn't like that either.

MisterMr , October 2, 2018 at 8:46 am

"those, some of whom are quite sophisticated, who believe that currencies should be backed by something of tangible value (and no, "the military" misses the point), or those who hold physical gold as an insurance policy against political incompetence, and the inexorable degradation of fiat currencies"

I suspect that Wray exactly means that these people are the goldbugs, not the ones who speculate on gold.

The whole point that currencies should be backed by something of tangible value IMO is wrong, and I think the MMTers agree with me on this.

Tinky , October 2, 2018 at 9:56 am

If so, then he should clarify his position, as again, lumping the billions – literally – of people who consider gold to be economically important, together as one, is disingenuous.

skippy , October 2, 2018 at 3:55 pm

I think people that consider gold to be a risk hedge understand its anthro, per se an early example of its use was a fleck of golds equal weight to a few grains of wheat e.g. the gold did not store value, but was a marker – token of the wheat's value – labour inputs and utility. Not to mention its early use wrt religious iconography or vis-à-vis the former as a status symbol. Hence many of the proponents of a gold standard are really arguing for immutable labour tokens, problem here is scalability wrt high worth individuals and resulting distribution distortions, unless one forwards trickle down sorts of theory's.

Not to mention in times of nascent socioeconomic storms many that forward the idea of gold safety are the ones selling it. I think as such the entire thing is more a social psychology question than one of factual natural history e.g. the need to feel safe i.e. like commercials about "peace of mind". I think a reasonably stable society would provide more "peace of mind" than some notion that an inanimate object could lend too – in an atomistic individualistic paradigm.

WobblyTelomeres , October 2, 2018 at 4:26 pm

I once had an co-worker that was a devout Christian. When he realized I wasn't religious, he asked me, incredulously, how I was able to get out of bed in the morning. Meaning, he couldn't face a world without meaning.

I think a lot of people feel that same way about money. They fight over it, lie for it, steal it, kill for it, go to war over it, and most importantly, slave for it. Therefore, it must have intrinsic value. I think gold bugs are in this camp.

Fried , October 2, 2018 at 6:06 am

Talking about Warren's blog ( http://moslereconomics.com/ ), everytime I try to go there, Cloudflare asks me to prove that I am human. Anyone know what's up with that? It's the only website I've ever seen do that.

Tinky , October 2, 2018 at 6:13 am

No such prompt for me (using Mac desktop computer, OS 10.11.6 and Safari browser.

Fried , October 2, 2018 at 7:35 am

Thanks. It seems to be blocking my IP address, no idea why. Not sure why I have to be human to look at a website.

Epistrophy , October 2, 2018 at 8:46 am

Try running your IP address through a blacklist checker maybe it's been flagged

Fried , October 2, 2018 at 10:03 am

Hm, I can't find anything that would explain it. Maybe the website just generally blocks Austrians. ;-)

el_tel , October 2, 2018 at 10:10 am

That's a good suggestion. Unfortunately, as I sometimes find, you can pass ALL the major test-sites but something (a minor, less-used site using out-of-date info?) can give you grief. NC site managers once (kindly) took the time to explain to me why I might have problems that they had no ability to address at their end. I had to muck around with a link given earlier to Bill Mitchell's blog before my browser would load it.
I think there can be quirks that are beyond our control (unfortunately) – for instance I think a whole block of IP addresses (including mine) used by my ISP have been flagged *somewhere* – no doubt due to another customer doing stuff that the checker(s) don't like. (The issue I mentioned above was more likely due to a strict security protocol in my browser, however.)

kgw , October 2, 2018 at 11:57 am

I ended up physically typing in the url to Bill Mitchell's blog: that worked.

el_tel , October 2, 2018 at 12:43 pm

yeah think that's what I did

larry , October 2, 2018 at 6:45 am

Monetary policy in terms of interest rates is not just weak, it also tends to treat all targets the same. Fiscal policy can be targetted to where it is felt it can do the most good.

William Beyer , October 2, 2018 at 7:00 am

Christine Desan's book, "Making Money," exhaustively documents the history of money as a creature of the state. Recall as well that creating money and regulating its value are among the enumerated POWERS granted to our government by we, the people. Money, indeed, is power.

Grumpy Engineer , October 2, 2018 at 8:26 am

Hmmm Randy Wray states that " permanent Zirp (zero interest rate policy) is probably a better policy since it reduces the compounding of debt and the tendency for the rentier class to take over more of the economy. "

But just last week, Yves stated that " that one of the consequences of the protracted super-low interest rate regime of the post crisis era was to create a world of hurt for savers, particularly long-term savers like pension funds, life insurers and retirees. " [ https://www.nakedcapitalism.com/2018/09/crisis-caused-pension-train-wreck.html ]

So are interest rates today too high, or too low? We're getting mixed messages here.

IMO, interest rates are too low . Beyond the harmful effect to savers, it also drives income inequality . How? When interest rates are less than inflation, it is trivial to borrow money, buy some assets, wait for the assets to appreciate, sell the assets, repay the debt, and still have profit left over even after paying interest . Well, it's trivial if you're already rich and have a line of credit that is both large and low-interest. If you're poor with a bad FICO score, you don't get to play the asset appreciation game at all.

I can't think of another reason inequality skyrocketed so badly during the Obama years: https://www.newsweek.com/2013/12/13/two-numbers-rich-are-getting-richer-faster-244922.html . Other than interest rates, his policies weren't all that different from Clinton or Bush.

Tinky , October 2, 2018 at 10:38 am

Not to mention that interest rates are designed to reflect risk . Artificially suppressed rates mask risk, and inevitably lead to gross malinvestment.

todde , October 2, 2018 at 12:31 pm

The rates between riskier and less risky borrowers will still be reflected in the different rates given to each.

The low rates encourage greater risk taking to increase the reward(a higher rate of return). This is what leads to the gross malinvestment.

Case in point: the low rates led to more investments into the stock market, where the returns are unlimited. This is what led to the income inequality of Obama's term, as mentioned above.

todde , October 2, 2018 at 3:07 pm

if government creates money to lend to borrowers it should be at a zero interest rate.

The loans would be based on public policy decisions, and not business decisions.

HotFlash , October 2, 2018 at 1:36 pm

I cannot speak for Yves, nor or Randy, but IMO, interest rates are too low for people who depend on interest for their living -- as an old person, I have seen my expected income drop to about zilch when I had expected 7 to 10% on my savings. Haha! So yeah, too low for us who saved for 'retirement'.

Too high for people financing on credit, since a decent mortgage on a modestly-priced house will cost you almost the same as the house . And that doesn't even begin to look at unsecured consumer credit (ie, credit card debt), which is used in the US and other barbaric countries for medical expenses, not to mention student debt. The banks can create the principal with their keystrokes, but they don't create the interest. Where do you suppose that comes from? Hint: nowhere, as in foreclosures and bankruptcies.

Adam1 , October 2, 2018 at 3:12 pm

Wray's statement reflects his preferences from an operational policy perspective. Sovereign government debt cares no risk and therefore should not pay interest. The income earned from that interest is basically a subsidy and all income when spent caries a risk of inflation induced excess demand. Therefore who unnecessarily add the risk to the economy and potential risk needing to reduce other policy objectives to accommodate unnecessary interest income subsidies to mostly rich people?

Yves comment reflects the reality of prior decades of economic history. Even if Wray's policy perspective is optimal, there are decades of people with pensions and retirement savings designed around the assumption of income from risk-free government debt. It's this legacy that Yves is commenting on and is a real problem that current policy makers are just ignoring.

As for your comments on how low cost credit can be abused, I believe you'll find most MMT practitioners would recommend far more regulation on the extension of credit for non-productive purposes.

michael hudson , October 2, 2018 at 8:38 am

I just wrote a note to Randy:
The origin of money is not merely for accounting, but specifically for accounting for DEBT -- debt owed to the palatial economy and temples.
I make that clear in my Springer dictionary of money that will come out later this year: Origins of Money and Interest: Palatial Credit, not Barter

horostam , October 2, 2018 at 8:57 am

The Babylonian Madness is contagious thanks prof hudson

gramsci , October 2, 2018 at 9:22 am

Can somebody help me out here? It seems to me that the US macroeconomic policy has been operating under MMT at least since FDR (see for example Beardsley Ruml from 1945).

Since then, insofar as I understand MMT, fiat has been printed and distributed to flow primarily through the MIC and certain other periodically favored sectors (e.g. the Interstate Highway System). Then, rather than destroying this fiat through taxation, the sectoral balances have been kept deliberately out of balance: Taxes on unearned income have been almost eliminated with an eye to not destroying fiat, but to sequestering as much as possible in the private hands of the 1%. This accumulating fiat cannot be productively invested because that would cause overproduction, inflation, and reduce the debt burden by which the 1% retains power over the 99%. So the new royalists, as FDR would have styled them, keep their hoard as a war chest against "socialists".

I get all this, more or less, and I appreciate that it is well and good and important that MMTers insistently point out that the emperor has no clothes. This is a necessary first step in educating the 99%.

But I don't see MMT types discussing the fact that US (and NATO) macroeconomic policy already has a Job Guarantee: if you don't want to work alongside undocumented immigrants on a roof or in a slaughterhouse or suffer the humiliation of US welfare, such as it is, you can always get a job with the army, or the TSA, or the police, or as a prison guard, or if you have some education, with a health unsurance company or pushing drone buttons. You only have to be willing to follow orders to kill–or at least help to kill–strangers.

(Okay, perhaps I overstate. If you're a medical doctor or an "educator" with university debt you don't have to actively kill. You can decline scant Medicaid payments and open a concierge practice, or you can teach to the test in order that nobody learns anything moral.)

It is difficult to get a man to understand something, when his salary depends on his not understanding it. Wouldn't it be clarified matters if MMTers acknowledged that we already have a JG?

Wukchumni , October 2, 2018 at 12:50 pm

We have been operating on MMT since the end of WW2, with 2 exceptions in 1968 when Silver Certificate banknotes no longer were redeemable for silver, and in 1971 when foreign central banks (not individuals!) weren't allowed to exchange FRN's for gold @ $35 an ounce anymore.

It's been full on fiat accompli since then and to an outsider looks absurd in that money is entirely a faith-based agenda, but it's worked for the majority of all of lives, so nobody squawks.

It's an economic "the emperor has no clothes" gig.

HotFlash , October 2, 2018 at 1:54 pm

It seems to me that the US macroeconomic policy has been operating under MMT at least since FDR (see for example Beardsley Ruml from 1945).

Yup, you are correct, IMO. And about the jobs guarantee, too. The point of MMT is not that we have to adopt, believe in, or implement it, but that *this is how things work* and we need to get a %&*^* handle on it *STAT* or they will ride it and us to the graveyard. The conservatives and neo-cons are already on to this, long-time.

I believe the chant is:

We can have anything we want that is available in our (sovereign) currency and for which there are resources

What we get depends on what we want and how well we convince/coerce our 'leaders' to make it so.

David Swan , October 2, 2018 at 2:43 pm

JG is geared toward community involvement to create an open-ended collection of potential work assignments, not top-down provision of a limited number of job slots determined by bureaucrats on a 1% leash.

Wukchumni , October 2, 2018 at 9:31 am

About every 80 years, there has been a great turning in terms of money in these United States

Might as well start with 1793 and the first Federal coins, followed in 1861 by the first Federal paper money, and then the abandonment of the gold standard (a misnomer, as it was one of many money standards @ era, most of them fiat) in 1933.

We're a little past our use-by date for the next incarnation of manna, or is it already here in the guise of the great giveaway orchestrated since 2008 to a selected few?

Adam1 , October 2, 2018 at 9:40 am

After learning MMT I've occasionally thought I should get a refund for the two economics degree's I originally received. One of the primary mainstream teachings that I now readily see as false is the concept of money being a vale over a barter economy. It's lazy, self-serving analysis. It doesn't even pass a basic logical analysis let alone archeological history. Even in a very primitive economy it would be virtually impossible for barter to be the main form of transaction. The strawberry farmer can't barter with the apple farmer. His strawberries will be rotten before the apples are ripe. He could give the apple farmer strawberries in June on the promise of receiving apples in October, but that's not barter that's credit. The apple farmer could default of his own free will or by happenstance (he dies, his apple harvest is destroyed by an act of god, etc ). How does the iron miner get his horse shoed if the blacksmith needs iron before he can make the horse show? Credit has to have always been a key component of any economy and therefore barter could never have been the original core.

HotFlash , October 2, 2018 at 2:00 pm

After learning MMT I've occasionally thought I should get a refund for the two economics degree's I originally received.

Agreed. Richard Wolff notes that in most Impressive Universities there are two schools, one for Economics (theory) and another for Business (practice). Heh. I say, go for the refund, you was robbed.

Wukchumni , October 2, 2018 at 10:11 am

Take Indians for instance

All the Rupee* has done over time is go down in value against other currencies, and up in the spot price measured in Rupees even as gold is trending down now, and that whole stupid demonetization of bank notes gig, anybody on the outside of the fiat curtain looking in, had to be laughing, and ownership there is no laughing matter, as it's almost a state financial religion, never seen anything like it.

* A silver coin larger than a U.S. half dollar pre-post WW2, now worth a princely 1.4 cents U.S.

Chauncey Gardiner , October 2, 2018 at 12:34 pm

Not an economist, but I appreciate both the applicability of MMT and the fierce, but often subtle resistance its proponents have encountered academically, institutionally and politically. However, I have questioned to what extent MMT is uniquely applicable to a nation with either a current account surplus or that controls access to a global reserve currency.

How does a nation that is sovereign in its own currency, say Argentina for example (there are many such examples), lose 60 percent of its value in global foreign exchange markets in a very short time period?

Is this due primarily to private sector debts denominated in a foreign currency (and if so, what sectors of the Argentine economy undertook those debts, for what purposes, and to whom are they owed?), foreign exchange market manipulation by external third parties, the effective imposition of sanctions by those who control the global reserve currency and international payments system, or some combination of those or other factors?

Mel , October 2, 2018 at 12:53 pm

Michael Hudson described some of it earlier this year:
https://www.nakedcapitalism.com/2018/07/michael-hudson-argentina-gets-biggest-imf-loan-history.html

Rodger Malcolm Mitchell , October 2, 2018 at 3:48 pm

All hyperinflations are caused by shortages, usually shortages of food. See: https://mythfighter.com/2018/08/27/ten-answers-that-are-contrary-to-popular-wisdom/

There is no avoiding bad government.

PKMKII , October 2, 2018 at 1:57 pm

MMT makes more sense than orthodox neoliberal accounts of currency and sovereign spending to me, as it does a better job of acknowledging reality. MMT recognizes that currency is an artifice and that imagined limitations on it are just that, and real resources are the things which are limited. Neoliberal economics acts as if all sorts of byzantine factors mean currency must be limited, but we can think of resources, and the growth machine they feed, as being infinite.

Rodger Malcolm Mitchell , October 2, 2018 at 3:41 pm

"Taxes or other obligations (fees, fines, tribute, tithes) drive the currency."

Specifically, what does "drive" mean? Does it mean:
1. When taxes are reduced, the value of money falls?
2. If taxes were zero, the value of money would be zero?
3. Cryptocurrencies, which are not supported by taxes, have no value?

"JG is a critical component of MMT. It anchors the currency and ensures that achieving full employment will enhance both price and financial stability."

Specifically, what do "anchors" and "critical component" mean? Do they mean:
1. Since JG does not exist, the U.S. dollar is unanchored and MMT does not exist?
2. Providing college graduates with ditch-digging jobs enhances price and financial stability?
3. Forcing people to work is both morally and economically superior to giving them money and benefits?

Grebo , October 2, 2018 at 4:20 pm

"Drive" means "creates initial demand for":
1. No, not for an established currency.
2. See 1.
3. Crypto is worth what you can buy with it.

"Anchors" means it acts against inflation and deflation. "Critical component" means the economy works better if it has it.
1. Yes and no.
2. Yes, if no-one else will hire them.
3. No element of force is implied.

[Oct 02, 2018] The Inevitable Oil Supply Crunch

Notable quotes:
"... "Barring technology breakthrough beyond what we already assume, we'll need new oil discoveries," ..."
"... "We haven't seen anything like this since the 1940s," ..."
"... "The most worrisome is the fact that the reserve replacement ratio in the current year reached only 11 percent (for oil and gas combined) - compared to over 50 percent in 2012." ..."
"... "The mind set for most E&Ps is still to be conservative, and default is to return capital to shareholders. Yet the duty to shareholders' interests cannot be myopically short term. More of the 'windfall' cash needs to find its way into exploration to sustain the business in the long term," ..."
"... "frontier areas," ..."
"... "Suriname, the Brazilian Equatorial Margin; Mexico; Senegal, Gambia, Namibia and South Africa; Australia and Alaska." ..."
"... "More explorers need to get in on the action if the spectre of 'peak supply' is to be kept at bay," ..."
Oct 02, 2018 | oilprice.com

"The warning signs are there – the industry isn't finding enough oil." That's the start of a new report from Wood Mackenzie. The report concludes that a supply gap could emerge in the mid-2020s as demand rises at a time when too few new sources of supply are coming online.

By 2030, there could be a supply shortfall on the order of 3 million barrels per day (mb/d), WoodMac argues. By 2035, it balloons to 7 mb/d, and by 2040, it reaches 12 mb/d. "Barring technology breakthrough beyond what we already assume, we'll need new oil discoveries," the report says.

The seeds of the problem were sown during the oil market downturn that began in 2014. Global upstream exploration spending plunged from $60 billion in 2014 to just $25 billion in 2018, according to WoodMac. Unsurprisingly, that translated into a steep decline in new discoveries. In the early part of this decade, the oil industry was discovering around 8 billion barrels of oil annually. That figure has plunged by three quarters since 2014.

Read more © Todd Korol US sanctions against Iran could give oil a boost to $100 amid dramatic shortfall in supplies

The precise figures vary, but Rystad Energy came a similar conclusion, noting that the total volume of new oil and gas reserves discovered plunged to a record low in 2017. "We haven't seen anything like this since the 1940s," Sonia Mladá Passos, Senior Analyst at Rystad Energy, said in a December 2017 statement . "The most worrisome is the fact that the reserve replacement ratio in the current year reached only 11 percent (for oil and gas combined) - compared to over 50 percent in 2012."

This year, the industry has had a bit more success. Spending is on the rebound and new discoveries are on track to rise by about 30 percent, although that is heavily influenced by the developments in Guyana, where ExxonMobil and Hess Corp. have reported nearly a dozen discoveries, and hope to ramp up production to around 750,000 bpd by 2025.

It still may not be enough. Even if the industry were to somehow return to the good ol' days prior to the 2014 market crash, and begin discovering around 8 billion barrels of oil each year, it would only delay the supply crunch into the 2030s, according to WoodMac.

But, of course, that rate of discovery remains far below those levels, so the supply crunch may take place much sooner. Moreover, because large-scale projects take several years to develop, the activity taking place today will determine the supply mix in the mid- to late-2020s.

WoodMac says that the rate of discovery is highly correlated with the level of spending, so closing the supply gap will require more capital. And because of the run up in oil prices this year, the industry will have a lot more cash to throw around.

Read more © Nick Oxford Oil surges to 4-year high as investors see no sign of production rise amid Iran sanctions

The problem for the industry is that over the last few years the mindset, and the demands of shareholders, have shifted from production growth to profitability and investor returns. Shareholders are pressuring executives to return cash in the form of dividends and share buybacks. Energy stocks are not the darlings of Wall Street in the way they once were, particularly prior to the 2014 market meltdown. That puts extra pressure on oil and gas companies to dish out more of their earnings to investors rather than plowing it back into the ground.

But that means less spending on exploration. "The mind set for most E&Ps is still to be conservative, and default is to return capital to shareholders. Yet the duty to shareholders' interests cannot be myopically short term. More of the 'windfall' cash needs to find its way into exploration to sustain the business in the long term," WoodMac said in its report.

Shale output will continue to grow, especially after new pipelines come online in Texas, which will ease the current bottleneck. But the large-scale increases in production in the medium-term will come from "frontier areas," WoodMac says, as the string of discoveries in Guyana prove. WoodMac says the areas with the highest potential include "Suriname, the Brazilian Equatorial Margin; Mexico; Senegal, Gambia, Namibia and South Africa; Australia and Alaska."

For now, the level of activity is not enough to stave off the supply crunch, WoodMac warns, unless there is a dramatic increase in spending. "More explorers need to get in on the action if the spectre of 'peak supply' is to be kept at bay," the consultancy says.

This article was originally published on Oilprice.com

[Sep 29, 2018] True, this "living wage" issue has become now America's chronic illness.

Sep 29, 2018 | www.unz.com

Andrei Martyanov , says: Website August 11, 2017 at 8:18 pm GMT

@iffen

Employment at less than a living wage is not "employment."

True, this "living wage" issue has become now America's chronic illness. Once one begins to look at the real estate dynamics, even for a good earners living in such places as Seattle, Portland (not to speak of L.A. or SF) becomes simply not affordable, forget buying anything decent. Hell, many rents are higher than actual mortgages, however insane they already are.

[Sep 28, 2018] Art Berman Don't Believe The Hype - Oil Prices Aren't Going Back To $100

Sep 27, 2018 | www.zerohedge.com

The breakout in Brent crude prices above $80 this week has prompted analysts at the sell side banks to start talking about a return to $100 a barrel oil . Even President Trump has gotten involved, demanding that OPEC ramp up production to send oil prices lower before they start to weigh on US consumer spending, which has helped fuel the economic boom over which Trump has presided, and for which he has been eager to take credit.

But to hear respected petroleum geologist and oil analyst Art Berman tell it, Trump should relax. That's because supply fundamentals in the US market suggest that the recent breakout in prices will be largely ephemeral, and that crude supplies will soon move back into a surplus.

Indeed, a close anaysis of supply trends suggests that the secular deflationary trend in oil prices remains very much intact. And in an interview with MacroVoices , Berman laid out his argument using a handy chart deck to illustrate his findings (some of these charts are excerpted below).

As the bedrock for his argument, Berman uses a metric that he calls comparative petroleum inventories. Instead of just looking at EIA inventory data, Berman adjusts these figures by comparing them to the five year average for any given week. This smooths out purely seasonal changes.

And as he shows in the following chart, changes in comparative inventory levels have precipitated most of the shifts in oil prices since the early 1990s, Berman explains. As the charts below illustrate, once reported inventories for US crude oil and refined petroleum products crosses into a deficit relative to comparative inventories, the price of WTI climbs; when they cross into a surplus, WTI falls.

Looking back to March of this year, when the rally in WTI started to accelerate, we can on the left-hand chart above how inventories crossed below their historical average, which Berman claims prompted the most recent run up in prices.

Comparative inventories typically correlate negatively to the price of WTI. But occasionally, perceptions of supply security may prompt producers to either ramp up - or cut back - production. One example of this preceded the ramp of prices that started in 2010 when markets drove prices higher despite supplies being above their historical average. The ramp continued, even as supplies increased, largely due to fears about stagnant global growth in the early recovery period following the financial crisis.

The most rally that started around July 2017 correlated with a period of flat production between early 2016 and early 2018.

Meanwhile, speculators have been unwinding their long positions. Between mid-June 2017 and January 2018, net long positions increased +615 mmb for WTI crude + products, and +776 for WTI and Brent combined. Since then, combined Brent and WTI net longs have fallen -335 mmb, while WTI crude + refined product net long positions have fallen -225 mmb since January 2018 and -104 mmb since the week ending July 10. This shows that, despite high frequency price fluctuation, the overall trend in positioning is down.

And as longs have been unwinding, data show that the US export party has been slowing, as distillate exports, which have been the cash cow driving US refined product exports, have declined. Though they remain strong relative to the 5-year average, they have fallen relative to last year. This has accompanied refinery expansions in Mexico and Brazil.

Meanwhile, distillate and gasoline inventories have been building.

Meanwhile, US exports of crude have remained below the 2018 average in recent weeks, even as prices have continued to climb.

This could reflect supply fears in the global markets. The blowout in WTI-Brent spreads would seem to confirm this. However, foreign refineries recognize that there are limitations when it comes to processing US crude (hence the slumping demand for exports).

In recent weeks, markets have been sensitive to supply concerns thanks to falling production in Venezuela and worries about what will happen with Iranian crude exports after US sanctions kick in in November.

But supply forecasts for the US are telling a different story than supply forecasts for OPEC. In the US, markets will likely remain in equilibrium for the rest of the year, until a state of oversupply returns in 2019. But OPEC production will likely continue to constrict, returning to a deficit in 2019.

Bottom line: According to Berman, the trend of secular deflation in oil prices remains very much intact. While Berman expects prices to remain rangebound for the duration of 2018 - at least in the US - it's likely markets will turn to a supply surplus next year, sending prices lower once again.

Listen to the full interview below

[Sep 27, 2018] Even those nations desirous of undoing dollar hegemony have said it cannot be done overnight as the overall system is both too complex and too fragile for hasty adjustments to be made stably. Moreover, for better or worse, the Outlaw US Empire's an integral component of the global economy, which motivates those changing the system to arrive at a Soft Landing, not a Hard Crash.

Sep 27, 2018 | www.moonofalabama.org

Sunny Runny Burger , Sep 26, 2018 4:06:24 PM | link

Karlof1 I could be wrong of course but one example of why none of that would matter is when the US dollar for all practical purposes winks out of existence and that could happen right now as we speak. Why would that happen you may ask? It would happen whenever someone "beyond personal wealth" like the usual finance suspects decides it is the way for them to make enormous amounts of profit out of the resulting worldwide instability before any of their competitors beat them to it. The longer they wait the more likely someone else will jump the gun and surprise them.

I don't think the US has two years worth of "blood" left in it before that happens.

In a sense nothing will be left when each and every dollar becomes at least 20 trillion times less valuable. If the response to that happening is the same as the early 20ieth century response (Germany) then nothing will be left at all considering the difference in technology and differences in circumstance (everybody already have the weapons ready). If the response is the late 20ieth century response (USSR) then maybe something will be left but the USSR was both lucky and relatively solvent in comparison to the current US. The starting point for the US is several magnitudes worse in both examples. The world can't afford to carry the US at cost any more than the US can't right now and like the US haven't been able to for decades, the required wealth doesn't exist.

karlof1 , Sep 26, 2018 5:13:27 PM | link

Sunny Runny Burger @24--

The nascent USA had its national capital sacked and presidential residence burnt during what's known as the War of 1812, yet it continued to exist politically. Same during Civil War. During the Revolutionary War, the USA had a national government and 13 separate state governments, all of which continued to function as the war raged. There've been at least two Coups--1963 and 2000--but the USA continued its political existence. Even the Germany destroyed by WW2 still existed politically. Destroying political entities is very--extremely--difficult, which is why it seldom occurs. Rome's central authority ceased in the mid 6th century but its provinces continued as did the Eastern portion of the Roman Empire. Russia's governmental system was drastically altered during and after Russia's Civil War, but Russia continued to exists as a political entity. The USSR was an imperial governing edifice built atop numerous national political entities. It did vanish, but the nations comprising it didn't; indeed, new nations were born as a result.

As for the dollar and its international position, even those nations desirous of undoing dollar hegemony have said it cannot be done overnight as the overall system is both too complex and too fragile for hasty adjustments to be made stably . Moreover, for better or worse, the Outlaw US Empire's an integral component of the global economy, which motivates those changing the system to arrive at a Soft Landing, not a Hard Crash.

Catastrophism belongs in the realm of Geology, not Geopolitics, although the former will certainly affect the latter. Geopolitics can certainly enable an ecological crisis such as the Overshoot we're now entering, but that's several magnitudes less than what rates as a geological catastrophe--and not all such catastrophes are global.

[Sep 27, 2018] The power elites goal is to change its appearance to look like something new and innovative to stay ahead of an electorate who are increasingly skeptical of the neoliberalism and globalism that enrich the elite at their expense.

Highly recommended!
Sep 27, 2018 | www.moonofalabama.org
james , Sep 26, 2018 10:19:13 PM | link

Pft , Sep 26, 2018 9:58:02 PM | link

In my own words then. According to Cook the power elites goal is to change its appearance to look like something new and innovative to stay ahead of an electorate who are increasingly skeptical of the neoliberalism and globalism that enrich the elite at their expense.

Since they do not actually want change they find actors who pretend to represent change , which is in essence fake change. These then are their insurgent candidates

Trump serves the power elite , because while he appears as an insurgent against the power elite he does little to change anything

Trump promotes his fake insurgency on Twitter stage knowing the power elite will counter any of his promises that might threaten them

As an insurgent candidate Trump was indifferent to Israel and wanted the US out of Syria. He wanted good relations with Russia. He wanted to fix the health care system, rebuild infrastructure, scrap NAFTA and TTIPS, bring back good paying jobs, fight the establishment and Wall Street executives and drain the swamp. America First he said.

Trump the insurgent president , has become Israel's biggest cheerleader and has launched US missiles at Syria, relations with Russia are at Cold War lows, infrastructure is still failing, the percentage of people working is now at an all time low in the post housewife era, he has passed tax cuts for the rich that will endanger medicare, medicaid and social security and prohibit infrastructure spending, relaxed regulations on Wall Street, enhanced NAFTA to include TTIPS provisions and make US automobiles more expensive, and the swamp has been refilled with the rich, neocons , Koch associates, and Goldman Sachs that make up the power elites and Deep State Americas rich and Israel First

@34 pft... regarding the 2 cook articles.. i found they overly wordy myself... however, for anyone paying attention - corbyn seems like the person to vote for given how relentless he is being attacked in the media... i am not so sure about trump, but felt cook summed it up well with these 2 lines.. "Trump the candidate was indifferent to Israel and wanted the US out of Syria. Trump the president has become Israel's biggest cheerleader and has launched US missiles at Syria." i get the impression corbyn is legit which is why the anti-semitism keeps on being mentioned... craig murrary is a good source for staying on top of uk dynamics..

Piotr Berman , Sep 26, 2018 10:23:41 PM | link

For Trump to be "insurgent" he should

(a) talk coherently
(b) have some kind of movement consisting of people that agree with what is says -- that necessitates (a)

Then he could staff his Administration with his supporters rather than a gamut of conventional plutocrats, neocons, and hacks from the Deep State (intelligence, FBI and crazies culled from Pentagon). As it is easy to see, I am describing an alternate reality. Who is a Trumpian member of the Administration? His son-in-law?

karlof1 , Sep 26, 2018 11:42:43 PM | link
Pft @34--

Yes. just like Obama before him--another snake in the swamp!

Pft , Sep 27, 2018 12:53:59 AM | link
Karlof1@39

The swamps been filled with all kinds of vile creatures since the Carter administration. This is when the US/UK went full steam ahead with neoliberal globalism with Israel directing the war on terror for the Trilateral Empire (following Bibis Jerusalem conference so as to fulfill the Yinon plan). 40 years of terror and financial mayhem following the coup that took place from 1963-1974. After Nixons ouster they were ready to go once TLC Carter/Zbig kicked off the Trilateral era. Reagan then ran promising to oust the TLC swamp but broke his promise, as every President has done since .

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[Sep 27, 2018] Some have mentioned that Trump's actually working to undermine the efficacy of the Outlaw US Empire.

Sep 27, 2018 | www.moonofalabama.org

karlof1 , Sep 26, 2018 3:15:48 PM | link

uuu @19--

The House organizes an investigation to arrive at a list known as Articles of Impeachment and votes to send them to Senate for Trial. Nixon was never Impeached. I think you meant to write that, but you didn't proofread.

Actually, the hypothetical outcome with Pence becoming POTUS is worth exploring for the wrongness of attempting to Impeach Trump as Pence is far more dangerous--although he keeps his mouth closed, Pence is very much like Bolton, and most agree Bolton as POTUS would be a disaster.

Some have mentioned that Trump's actually working to undermine the efficacy of the Outlaw US Empire. IMO, that would make an interesting thread topic. However, IMO, the Democrats, particularly Obama, Powers, Clinton, and Kerry did much prior to Trump to erode the Empire's Soft Power and empower the world's nations to begin resisting. The combination of BigLie Media and 100% unsubstantiated allegations powering Russiagate/Skripal has disgusted many and made the opportunities offered by China and Russia more attractive thanks to putting the arrogance of the Outlaw US Empire on full display--something BigLie Media cannot censor or spin to make disappear.

[Sep 27, 2018] Corbyn's Labour Party's aggressively on the move to end neoliberalism within UK

Sep 27, 2018 | www.moonofalabama.org

karlof1 , Sep 26, 2018 3:55:10 PM | link

Yes, it's OT, yet it's germane just the same.

For those barflies not following what's happening politically in UK, you should know that Corbyn's Labour Party's aggressively on the move to end neoliberalism within UK. The best place to follow this show, IMO, is through Corbyn's Twitter , which currently has several short video ads at its top that I find compelling and powerful--the sort of ad campaigns that USA's Democrat Party would have run in the 1930s but won't today since it's 100% captured by neoliberal twats who'd rather help corporations than people. Indeed, if Trump's MAGA had produced its own version of My Town , he would have won even more handily (But he'd never be able to get Congress to pass any of his program since it's not Neoliberal--both Ds and Rs would vote it down).

IMO, once Labour regains control of UK government, much will also change within EU, and within the overall global order. Imagine an EU and UK having good relations with Russia and the changes that would generate.

[Sep 25, 2018] Marxian And Keynesian Critiques Of Neoliberalism Socialist Register by Alfredo Saad-Filho

Highly recommended!
Notable quotes:
"... Neoliberalism has lost much of its political legitimacy and nearly all its popular appeal during the last decade. Apologias of privatization, fiscal restraint, high interest rates, capital account liberalization, trade union-bashing and other policies overtly associated with the neoliberal reforms are in retreat. After sailing triumphantly to world domination in the eighties and nineties, neoliberalism has become a political liability. Its strident rhetoric has grown tired, and no longer brings votes - quite the contrary; neoliberal platforms must now be disguised. The political shriveling of neoliberalism has been especially evident since the East Asian crises and the collapse of the dot.com bubble. ..."
"... The political retreat of neoliberalism is startlingly evident in any reputable bookshop: the number of titles purporting to defend the neoliberal reforms has declined precipitously both in quality and in market appeal, while a large number of critical works have become available to growing numbers of readers.1 ..."
"... In spite of these political defeats, neoliberalism continues to be not only the dominant economic policy, but also the dominant modality of social and economic reproduction in most countries. ..."
"... And there is not even token recognition of the erosion of the political legitimacy of the capital relation in the sixties and seventies. Consequently, Keynesian analyses fail completely to realize that neoliberalism was a project of recomposition of the hegemony of capital under new conditions of accumulation. ..."
"... What is missing in Keynesian analysis is a methodologically structured account of the nature of capitalist accumulation, and an explanation of its intrinsic instability. ..."
"... But neoliberalism is not merely a set of economic and social policies, which can be easily replaced by an alternative set through the democratic process. Neoliberalism - just like the Keynesianism which it replaced - has a specific material basis.4 Neoliberalism combines an accumulation strategy, a mode of social and economic reproduction and a mode of exploitation and social domination based on the systematic use of state power to impose, under the ideological veil of non-intervention, a hegemonic project of recomposition of the rule of capital in all areas of social life. This project is guided by the current imperatives of the international reproduction of capital, which are represented most clearly by financial market interests and the global interests of US capital. ..."
"... Under neoliberalism, domestic politics has become tightly constrained by the need to insulate the process of accumulation (the 'market') from popular demands, especially the imperative to control labour in order to secure international competitiveness. ..."
"... In any case, neoliberalism has been able to support much higher standards of consumption for the top strata of the population, due to its concentrating dynamics and its promotion of consumer debt. ..."
"... The Keynesian claim that the neoliberal reforms have increased the returns of financial capital at the expense of industry is also a red herring. For the purpose of the neoliberal reforms is not to promote growth, reduce inflation or even to increase the portfolio choices of the financial institutions. The aim of the neoliberal reforms is to subordinate local working classes and domestic accumulation to international imperatives, promote the microeconomic integration of circuits of capital, mediated by finance, and expand the scope for financial system control of the three main sources of capital in the economy: state finance, the domestic savings pool, and the linkages between domestic and foreign capital. ..."
"... The transfer of the main levers of accumulation to international capital, mediated by tightly integrated US-led financial institutions, and regulated by US-controlled international financial organizations, has consolidated the material basis of neoliberalism globally. The prominence of finance expresses the subsumption of sectoral capitalist interests by the interests of capital as a whole. In policy terms, it ensures that accumulation is no longer regulated by contingent sectoral coalitions, especially in the poor countries, but by the capitalist class. ..."
"... First, Keynesians often argue that macroeconomic instability and frequent financial and balance of payments crises show that neoliberalism is fundamentally flawed. This is correct in exactly the same sense that, in the abstract, economic crises show that capitalism is a flawed mode of production. However, just as crises offer the opportunity to restore balance in capitalist accumulation, crises play a constructive - and even a constitutive - role under neoliberalism. ..."
"... Perversely, economic and financial crises show that the system works, and they help to make it work more smoothly in the long-term. ..."
"... Second, it is widely known that most governments promising to introduce alternative policies have failed. These failures clearly show that transcending neoliberalism is difficult and costly. At a deeper level, they also show that moving away from, or beyond, neoliberalism is not primarily a subjective problem of selecting the 'correct' industrial, financial or monetary policies. ..."
Jan 01, 2008 | socialistregister.com
Abstract

A Marxist examination of the material basis of neoliberalism throws light on several limitations of rival Keynesian critiques of neoliberalism. Two of these limitations are especially significant. First, Keynesians often argue that macroeconomic instability and frequent financial and balance of payments crises show that neoliberalism is fundamentally flawed. This is correct in exactly the same sense that, in the abstract, economic crises show that capitalism is a flawed mode of production. However, just as crises offer the opportunity to restore balance in capitalist accumulation, crises play a constructive--and even a constitutive--role under neoliberalism. They help to impose policy discipline on governments, and they compel both capitalists and workers to behave in ways that support the reproduction of neoliberalism. Perversely, economic and financial crises show that the system works, and they help to make it work more smoothly in the long-term. Second, it is widely known that most governments promising to introduce alternative policies have failed. These failures clearly show that transcending neoliberalism is difficult and costly. At a deeper level, they also show that moving away from, or beyond, neoliberalism is not primarily a subjective problem of selecting the 'correct' industrial, financial or monetary policies. Transcending neoliberalism will involve both economic and political transformations that can be addressed only through the construction of an alternative system of accumulation. These achievements cannot be resolved theoretically or through purely conceptual analysis: they are political problems, to be addressed strategically in the process of struggle for the emergence of a new working-class movement for the age of neoliberalism.

Neoliberalism has lost much of its political legitimacy and nearly all its popular appeal during the last decade. Apologias of privatization, fiscal restraint, high interest rates, capital account liberalization, trade union-bashing and other policies overtly associated with the neoliberal reforms are in retreat. After sailing triumphantly to world domination in the eighties and nineties, neoliberalism has become a political liability. Its strident rhetoric has grown tired, and no longer brings votes - quite the contrary; neoliberal platforms must now be disguised. The political shriveling of neoliberalism has been especially evident since the East Asian crises and the collapse of the dot.com bubble. The corruption scandals that came to light under Bush II have helped to unmask the regressive nature of the neoliberal project and its organic links with the reconstitution of US imperialism. The political retreat of neoliberalism is startlingly evident in any reputable bookshop: the number of titles purporting to defend the neoliberal reforms has declined precipitously both in quality and in market appeal, while a large number of critical works have become available to growing numbers of readers.1

In spite of these political defeats, neoliberalism continues to be not only the dominant economic policy, but also the dominant modality of social and economic reproduction in most countries. It could easily be argued that the economic grip of neoliberalism is becoming stronger even as its political legitimacy wanes. This disconnect is examined below, through a specific angle: the sources, significance and political implications of the Keynesian and Marxist critiques of neoliberalism. These are important questions for readers of the Register for two reasons. First, and quite obviously, Marxist theory loses much of its relevance if it is disconnected from political action. Clarification of the differences between Marxian and rival interpretations of neoliberalism can help to strengthen the former and enhance its political relevance and mass appeal. Second, the argument developed below suggests that neoliberalism is a resilient system of accumulation which will neither collapse spontaneously, nor be dislodged simply through the workings of the electoral process. Mass action remains the essential lever for social transformation in the age of neoliberalism. However, neoliberalism has transformed the modalities of reproduction of the working class and the scope for independent working-class action. New forms of political participation need to be found, and new modes of organization developed, in order to challenge its dominance.

KEYNESIANISM AND NEOLIBERALISM

In neoclassical economic theory and in neoliberal rhetoric, capitalist ('market') economies spontaneously gravitate towards full employment and the most efficient use of resources, unless the adjustment path is blocked by market imperfections. These imperfections can include misguided government policies, trade union activity, peculiarities of the industrial structure or technology, and a whole host of 'distortions' which, ultimately, separate the real world from the mirage conjured up by the apologists of unbridled capitalism.

One of the most significant intellectual achievements of John Maynard Keynes was his alternative conceptualization of the capitalist macroeconomy. For Keynes, the aggregate level of output and employment is limited by aggregate demand (subject to capacity limits). If demand is insufficient, for example because of adverse profit expectations on the part of the investors, or because the state fails to adopt sufficiently proactive fiscal and monetary policies, firms will reduce production and employment. This could trigger a recession from which the economy may not emerge spontaneously. Conversely, if aggregate demand is excessive, output will eventually hit capacity limits, leading to inflation and balance of payments deficits. Keynes developed this fundamental insight in the midst of the Great Depression. It led him to believe that, in an advanced capitalist economy, the level of activity could stabilize at any level of unemployment. If there is no spontaneous tendency towards full employment, the economy can find itself lumbered with high unemployment indefinitely, at great economic and social cost. This may also lead to political instability. Keynes's reasoning offers a sharp break with the logic and the policy implications of neoclassical economics. It suggests that government intervention is essential to stabilize the economy at the desired level of unemployment, which should not be too high (to avoid needless deprivation) or too low (because of the possibility of inflation).

Keynes believes that the government can secure full employment and low inflation simultaneously if it fine-tunes aggregate demand using fiscal, monetary and incomes policy instruments (for example, adjusting the level and structure of taxation and government spending, fiddling with interest rates, regulating industrial relations, and so on).

Inspired by Keynes, economists developed an impressive technical and institutional apparatus that enabled the Western economies to avoid a repetition of the Great Depression. Relative economic - and, therefore, social and political - stability has been a lasting triumph of Keynesianism. Keynesians claim that their preferred policies were largely responsible for the post war 'golden age', when most capitalist countries experienced high growth rates, near-full employment, rising income levels and unprecedented levels of social integration. But Keynesianism has been in retreat since at least the mid-seventies. The neoliberal transformations in the US, the UK and elsewhere have reversed significant aspects of the Keynesian consensus, for example, through the large-scale privatization of productive state assets, reduced tolerance for trade union activity, and the reintegration/subordination of the working class through policies of high unemployment, low economic growth, concentration of assets and income, and the partial rollback of the welfare state. The Keynesian consensus is long gone. Contemporary capitalism has shifted, instead, towards specific modalities of economic, social and political reproduction associated with neoliberalism. Keynesian economists typically account for the retreat of Keynesianism in terms of two key processes.2 First, the success of Keynesian management during the postwar era was so complete that it seemed that the problems of income distribution and mass unemployment in the advanced economies had been resolved once and for all.

With the disappearance of the most obvious symptoms of poverty and inequality, and the seemingly irreversible stabilization of capitalism, many people became convinced that Keynesian policies, institutions and economic management were no longer needed. Second, Keynesianism was deeply divided between relatively conservative US Keynesians and relatively left-wing British post-Keynesians. The latter were traditionally based at the University of Cambridge, where Keynes, Sraffa, Joan Robinson and their disciples once taught. The Cambridge Faculty of Economics is today viciously neoclassical. It is easier for a camel to stray into the White House than for a non-mainstream economist to be hired at Cambridge. These divisions among Keynesians hinged, to a large extent, on their differing theories of income distribution. US Keynesians were generally committed to the neoclassical theory of distribution based on the marginal product of labour (which was accepted by Keynes himself) which implied that the existing distribution of income in a competitive economy is fundamentally fair - governments need only tinker with distribution at the margins, and real wage flexibility can raise the level of employment. These policy conclusions were rejected by British post-Keynesians, for whom the distribution of income depends primarily on institutional variables and power relations. US Keynesians also focused much more narrowly on short run economic management, in which a stable environment is important to foster business confidence, while UK Keynesians tended to focus on long term dynamic stabilization and the amelioration of entrenched inequalities. The theoretical conflicts among Keynesians contributed to their growing paralysis and, ultimately, made it impossible for a clear Keynesian ideology to emerge and compete against the neoliberal rhetoric which became increasingly popular in the late sixties and seventies.

The internal disagreements among Keynesians became especially problematic when the world economy entered into a long downturn in the early seventies, which Keynesians could neither explain nor address adequately. In the end, their school of thought dissolved into confusion. Only five years separate Richard Nixon's 1971 statement that 'we are all Keynesians now' from Jim Callaghan's pathetic admission at the Labour Party Conference during the 1976 IMF crisis that 'We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candor that that option no longer exists'.

The retreat of Keynesianism opened the way to the neoliberal reforms, which Keynesians have always insisted can only lead to a significant rise in unemployment, a shift of the distribution of income and power towards business, and greater economic volatility. A Keynesian policy would instead increase state economic intervention to rebalance the distribution of income and social power, provide public goods and services in greater abundance and promote systemic competitiveness and diffuse new technologies to secure higher saving and investment rates and stabilize aggregate demand.

A MARXIAN ALTERNATIVE

The Keynesian analysis of neoliberalism outlined in the previous section includes important insights and several appropriate policy proposals. How ever, it does not go far enough, or deep enough. For these reasons, it offers misleading hopes, three of which are examined here: the level of analysis, the problem of agency, and the role of the state and the scope for alternative economic policies.

NEOLIBERALISM AND THE LEFT

1. Level of Analysis

The Keynesian account of the decline of the 'golden age' and the rise of neoliberalism outlined in the previous section is too abstract and indeterminate because it fails to contextualize the transformations in capitalist production and in economic and state institutions taking place between the mid-forties and the late seventies. Instead, the analysis focuses on horizontal distributive conflicts between rival social groups and between states. These conflicts include disputes between the US, Western Europe and Japan, and between governments and the private sector, between finance and industry, and between industrial capital and the workers. These conflicts are normally not explained in detail; they are usually merely described as disputes over shares of the national (or, in the case of states, global) income. This is insufficient because it bypasses completely the conditions of work and the distribution of power on the shop floor and in society. In summary, Keynesian analyses tend to describe conflicts around the process of accumulation, while obscuring or ignoring completely conflicts about the nature of capitalist accumulation.3

Consequently, little explanation is offered of the crisis of profitability in the sixties and seventies, except that wages were too high. There is no significant attempt to incorporate into the analysis the anti-systemic social struggles taking place in the rich countries, or the socialist and anti-imperialist struggles in the poor countries. And there is not even token recognition of the erosion of the political legitimacy of the capital relation in the sixties and seventies. Consequently, Keynesian analyses fail completely to realize that neoliberalism was a project of recomposition of the hegemony of capital under new conditions of accumulation.

Keynesians take the extraction of surplus value for granted: the cake must grow so everyone can have more. The rest is just a matter of detail: it is who gets more icing and how the crumbs are scattered, which can be discussed in a civilized manner whether in parliament, or in bilateral negotiations or through a social accord brokered by a 'neutral' state. Fundamentally, everyone can become happier at the same time. The need for social discipline in order to preserve the conditions for the production and accumulation of surplus value, and the necessity of legitimacy and social order for economic stabilization is completely obviated in Keynesian analyses.

What is missing in Keynesian analysis is a methodologically structured account of the nature of capitalist accumulation, and an explanation of its intrinsic instability. This is not because the future is unknown, or because of distributive conflicts in the sphere of exchange (both of which are transhistorical phenomena), but because of radical uncertainty in the sphere of production, which is created by conflicts over the extraction of surplus value under specific modalities of capitalist accumulation.

Keynesians generally fail to explain why and how their preferred policies interacted with the process of accumulation between the forties and the seventies, how their interaction released forces that would render Keynesianism itself obsolete, and leave the field open to the advance of neoliberalism.

2. Agency

The second problem concerns agency. In Keynesian analyses of the economy the main determinant of collective action is narrow economic interest, whether it is located at the level of the individual or an interest group. These competing interests play against each other in an institutional context in which the state is both separated from society and the market, and intrinsically neutral, even if it can be temporarily captured by specific interest groups (including, for example, the rival neoliberal and Keynesian camps). This supports the Keynesian commitment to the transformative power of democracy, as the best way to remove the grip of neoliberalism and restore the conditions for stable growth and development.

But neoliberalism is not merely a set of economic and social policies, which can be easily replaced by an alternative set through the democratic process. Neoliberalism - just like the Keynesianism which it replaced - has a specific material basis.4 Neoliberalism combines an accumulation strategy, a mode of social and economic reproduction and a mode of exploitation and social domination based on the systematic use of state power to impose, under the ideological veil of non-intervention, a hegemonic project of recomposition of the rule of capital in all areas of social life. This project is guided by the current imperatives of the international reproduction of capital, which are represented most clearly by financial market interests and the global interests of US capital.

Under neoliberalism, domestic politics has become tightly constrained by the need to insulate the process of accumulation (the 'market') from popular demands, especially the imperative to control labour in order to secure international competitiveness. This has reduced drastically the scope for social policy, and led to higher unemployment and job insecurity in most countries. It has also created an income-concentrating dynamics of accumulation that can be limited, but not reversed, by marginal Keynesian interventions.

When viewed from this angle, the notorious inability of the neoliberal reforms to support high levels of investment or high GDP growth rates is really irrelevant. In any case, neoliberalism has been able to support much higher standards of consumption for the top strata of the population, due to its concentrating dynamics and its promotion of consumer debt.

The Keynesian claim that the neoliberal reforms have increased the returns of financial capital at the expense of industry is also a red herring. For the purpose of the neoliberal reforms is not to promote growth, reduce inflation or even to increase the portfolio choices of the financial institutions. The aim of the neoliberal reforms is to subordinate local working classes and domestic accumulation to international imperatives, promote the microeconomic integration of circuits of capital, mediated by finance, and expand the scope for financial system control of the three main sources of capital in the economy: state finance, the domestic savings pool, and the linkages between domestic and foreign capital.

The transfer of the main levers of accumulation to international capital, mediated by tightly integrated US-led financial institutions, and regulated by US-controlled international financial organizations, has consolidated the material basis of neoliberalism globally. The prominence of finance expresses the subsumption of sectoral capitalist interests by the interests of capital as a whole. In policy terms, it ensures that accumulation is no longer regulated by contingent sectoral coalitions, especially in the poor countries, but by the capitalist class.

Specifically, there can be no presumption that there is an 'antagonic' relationship between production and finance under neoliberalism, and no expectation that industrial capital will 'rebel' against finance and push for the restoration of Keynesianism. Industrial capital has a stake in the neoliberal model, and it is structurally committed to its reproduction. The internationalization of the circuits of capital, and financial market control of state fund ing, have made investment and the realization of profits dependent on world market conditions and the interests of international capital. This would make any attempt to decouple from the neoliberal compact very costly indeed - this is an unattractive business proposition.

3. The Role of the State and the Scope for Economic Policy

The third problem concerns the role of the state and the scope for economic policy. In Keynesian analyses the state is disembedded from society, and a Keynesian government could rise above the sectional interests that have hijacked the state under neoliberalism in order to implement policies that are both more egalitarian, and more in tune with the interests of productive capital rather than finance.

This proposition is politically appealing but it is analytically flawed. If the state is disembedded from society, why should it select policies that maximize the rate of accumulation or employment generation, or avoid financial crises? In principle, anything goes; all that the progressive camp needs to do is get their electoral act together. But the state, and the institutions comprised within it, are shaped by technology and ideology, and by class relations, conflicts, and material interests. Under these complex circumstances, it is hopelessly naïve to expect that the social basis of the state can be transformed via the electoral process alone. Since neoliberalism has developed its own material basis, it cannot be undone simply through the electoral process.

The Keynesian prescription thus fails to realize that, given the strength of the material basis of neoliberalism, progressive policies will tend to consolidate and fine-tune the current order, rather than undermine it. For exam ple, open regionalism and liberal interventionism limit the scope for activist industrial and trade policies, membership of the IMF and the World Bank rule out the imposition of controls over finance and the balance of payments, and support for the WTO curtails the possibility of internalization of systems of provision, which is essential for macroeconomic stability and long-term sustainable growth. Since neoliberalism is the contemporary form of capitalism, stable accumulation has become synonymous with accumulation under neoliberalism. Any fundamental change to the dominant system of accumulation is always destabilizing. Such fundamental change is necessary - but it is going to be neither smooth nor costless.

CONCLUSION

A Marxist examination of the material basis of neoliberalism throws light on several limitations of Keynesianism. Two of these limitations are especially significant.

First, Keynesians often argue that macroeconomic instability and frequent financial and balance of payments crises show that neoliberalism is fundamentally flawed. This is correct in exactly the same sense that, in the abstract, economic crises show that capitalism is a flawed mode of production. However, just as crises offer the opportunity to restore balance in capitalist accumulation, crises play a constructive - and even a constitutive - role under neoliberalism. They help to impose policy discipline on governments, and they compel both capitalists and workers to behave in ways that support the reproduction of neoliberalism. Perversely, economic and financial crises show that the system works, and they help to make it work more smoothly in the long-term.

Second, it is widely known that most governments promising to introduce alternative policies have failed. These failures clearly show that transcending neoliberalism is difficult and costly. At a deeper level, they also show that moving away from, or beyond, neoliberalism is not primarily a subjective problem of selecting the 'correct' industrial, financial or monetary policies.

Transcending neoliberalism will involve both economic and political transformations that can be addressed only through the construction of an alternative system of accumulation. This project will require dismantling systematically the material basis of neoliberalism through a set of radically redistributive and democratic economic policy initiatives. These policies will support a decisive shift to less unequal distributions of income, wealth and power, as a fundamental condition for democracy. These policy measures cannot be simply entrusted to government initiatives. They must be driven by a politically re-articulated working class, as one of the main levers for its own economic recomposition.

The problem is that this virtuous circle cannot be wished into being. It requires the development of new structures of political representation corresponding to the mode of existence of the working class under neoliberalism, and supporting the development of new modalities of reproduction for this class. These achievements cannot be resolved theoretically or through purely conceptual analysis: they are political problems, to be addressed strategically in the process of struggle for the emergence of a new working-class movement for the age of neoliberalism.

NOTES

1 See, for example, D. Harvey, The New Imperialism, Oxford: Oxford Univer sity Press, 2005; D. Harvey, A Brief History of Neoliberalism, Oxford: Oxford University Press, 2005; D. Harvey, Spaces of Global Capitalism: Towards a The ory of Uneven Geographical Development, London: Verso, 2006; K.S. Jomo, ed., Globalization under Hegemony: The Changing World Economy, Oxford: Oxford University Press, 2006; K.S. Jomo and B. Fine, ed., The New Development Economics after the Washington Consensus, Oxford: Oxford University Press, 2006; R. Kiely, Empire in the Age of Globalisation: US Hegemony and Neoliberal Disorder, London: Pluto Press, 2005; R. Kiely, The New Political Economy of Development: Globalization, Imperialism, Hegemony, London: Palgrave, 2006; and J. Stiglitz, Globalization and Its Discontents, Harmondsworth: Penguin, 2003.

2 See, for example, T. Palley, Keynesianism: What it is and why it still matters, 2005, available from http://www.thomaspalley.com.

3 For additional details, see A. Saad-Filho, 'Monetary Policy in the Neoliberal Transition: A Political Economy Review of Keynesianism, Monetarism and Inflation Targeting', in R. Albritton, B. Jessop and R. Westra, eds., Political Economy of the Present and Possible Global Futures, London: Anthem Press, 2007.

4 See A. Saad-Filho, 'Introduction' in Saad-Filho, ed., Anti-Capitalism: A Marxist Introduction, London: Pluto Press, 2003; and A. Saad-Filho and D. Johnston, 'Introduction' in Saad-Filho and Johnston, eds., Neoliberalism: A Critical Reader, London, Pluto Press, 2005.

[Sep 25, 2018] Tensions Grow As China, Russia, And Iran Lead The Way Towards A New Multipolar World Order Zero Hedge

Sep 25, 2018 | www.zerohedge.com

Logic and reason seem to have been abandoned long ago in Washington's decision-making, even more so given that Trump has completely renounced all his electoral promises regarding foreign policy. The rapprochement with Moscow is now a distant mirage; the special relationship between Xi Jinping and Trump is just the latter's propaganda, anxious as he is to reach an agreement with the DPRK and show some example of success to his base.

The logic of imposing more than $200 billion in tariffs on Chinese products, and then asking for strong support from Beijing in mediation with Pyongyang, seems more like the moves of a desperate person rather than those of an amateur. Even historical allies like South Korea, Pakistan, India and Turkey, as repeatedly stressed recently , fear Washington's irrationality and politics of "America First" and are running for cover. They are diversifying energy resources and ignoring American diktats, buying armaments from Russia, cooperating with China in large infrastructure projects to connect the vast Eurasian continent, and participating in economic and financial forums to diversify funding and cooperate on a new and industrial level.

Indeed, the strategic triangle that emerges between Tehran, Beijing and Moscow, seems to draw all the neighbouring countries into a large geopolitical waltz. A transition to a multipolar reality brings many advantages to Washington's allies, but it also brings many tensions with American oligarchs. The example of the sale of the S-400 in Ankara is an important wake-up call for the oligarchs of the American military-industrial complex, who see a potential loss in revenue. In the same way, the creation of an alternative system to SWIFT strongly reduces the centrality of American banking institutions and thus their political weight. We must also keep in mind Sino-Russian actions in Africa, which are progressively breaking the chains of Western neo-colonialism, thereby freeing African countries to pursue a more balanced foreign policy focused on their national interests.

This transition phase that we have been living in over the last few years will continue for some time. Like an already written script, the trend is easily discernible to a lucid mind free of Western propaganda. Erdogan certainly is not a person to be completely trusted, and the talks in Astana should be understood in this light, especially if viewed from the Russian-Iranian point of view. Yet such cooperation opens the door to an unprecedented future, although at present Astana seems more like an alternative to a bloody war between countries in Syria than a conversation between allies. Syria's future will unavoidably see the country's territorial integrity maintained, thanks to allies who are now disengaged from the Western system and are gravitating around centers of power opposed to Washington, namely Beijing, Moscow and Tehran.

The reconstruction of the country will bypass western sanctions and bring significant amounts of money to the country. In the same way Iraq, once under the rule of a dictator friendly to Washington, today openly and genuinely collaborates with Moscow, and especially Tehran, in defeating the Wahhabi proxies of Riyadh, an American ally.

The economic battle serves to complete the picture, with European allies forced to suffer huge economic losses as a result of sanctions against Russia and Iran . The tariffs on trade, especially to countries like Turkey, Japan and South Korea (although it seems that this proposal was intentionally sabotaged by a collaborator within the Trump administration), are further serving to push US allies to explore alternatives in terms of trust and cooperation.

China and Russia have seized the opportunities, offering through adroit diplomacy military, industrial and economic proposals that are drawing Washington's historical allies into a new political reality where there is less space for Washington's diktats.

The European establishment in some Western countries like Germany, France and the UK seems to have decided wait out Trump (this torture perhaps brought to an early end through a palace coup). But many others have instead intuited what is really happening in the West. Two factions are fighting each other, but still within the confines of a shared worldview that sees the United States as the only benevolent world power, and the likes of China and Russia as rivals that need to be contained. In such a difficult situation to manage, well-known leaders like Modi, Abe, Moon Jae-In and Erdogan are starting to take serious steps towards exploring possible alternatives to an exclusive alliance with the United States, that is, towards experiencing the benefits of a multipolar-world environment.

It is not just a question for these countries of breaking the strategic alliance with the United States. This aspect will probably not change for several years, especially in countries that have enormous military and economic ties with Washington. The path that South Korea, Turkey and Japan appear to be taking is deeply rooted in the concept of Multipolarity, which diversifies international relations, allowing countries to shop around to find the best opportunities. It is therefore not surprising to see the Japanese prime minister and the Russian president discussing at the economic forum in Vladivostok the possibility of signing a historic peace treaty. In the same way, if Turkey suffers a double political and economic attack from the US, it should not surprise us if they decide to purchase the S-400 defense system from Russia or start a full fledged campaign to de-dollarize. Such examples could be repeated, but the case of South Korea stands out. There is no need for Seoul to wait for Washington to mess things up diplomatically with Pyongyang before discussing the rebirth of relations between the two countries. Seoul is anxious to seize the opportunity for a renewed dialogue between leaders and solve the Korean impasse as much as possible. Finally, India, which has no intention of losing the opportunity for an economic partnership with Beijing and a military one with Moscow, launched the basis for a multi-party discussion between the Eurasian powers on the Afghan situation that has caused so much friction with Islamabad, especially with the new political phase that Imran Khan's victory as Pakistan's prime minister promises.

Washington faces all these scenarios with skepticism, annoyance and disgust, fearing losing important countries and its ability to determine the regional balance around the planet. What fascinates many analysts is the stubbornness and stupidity of US policy-makers. The more they try to prolong the US unipolar moment, the more incentive they give to other countries to jump on the multipolar bandwagon.

Even countries that probably have deep ties with the United States on an oligarchic level will have no alternative other than to modify and redesign their strategic alliances over the next 30 years. The United States continues along the path of diplomatic arrogance and strategic stupidity, mired in a civil war among its elites, with no end in sight.

Each scenario involving the US now has to be viewed with two factors in mind: not just the attempt to maintain an imperialist posture, but also an internal struggle involving its elites. This adds a further level of confusion for America's allies and the world in general, who strain to decipher the next moves of a deep state totally out of control.


WTFUD , 1 minute ago

To American Exceptionalism

Dearly Beloved

We are gathered here . . . . . to say **** You . . . . . .

Adolfsteinbergovitch , 3 minutes ago

Next thing you know, the once glorious USA have become the pariah of this world.

And nobody sees this as a bad thing. That's just the cycle of life.

turkey george palmer , 12 minutes ago

It's always the same. Stupid corrupt right wing blather about family values back in the 80's, still a winning line of ********. Trump took it to cartoonish levels and got the low informed vote to come out and git er done...
Course Hillary charged them up too, which is really surprising unless Ole bent pecker bill really told Lynch to launch the deep state overthrow of trump and was actually letting Hillary throw the election.

[Sep 23, 2018] Chris Hedges Are We Witnessing The Collapse Of The American Empire

Video
Sep 23, 2018 | www.realclearpolitics.com

Steve Paikin, host of the TVOntario (TVO) program The Agenda with Steve Paikin , speaks with Pulitzer Prize-winning journalist Chris Hedges, a vociferous public critic of presidents on both sides of the American political spectrum, and author of the new book, America, the Farewell Tour . Hedges delivers the biting assessment of the state of American democracy that our neighbors to the North are not polite enough to say on their own.

[Sep 22, 2018] The USA has been in a secular decline since at least Carter (1978)

Sep 22, 2018 | www.moonofalabama.org

vk , Sep 22, 2018 7:32:53 PM | link

@ Posted by: Seamus Padraig | Sep 22, 2018 2:41:37 PM | 4

@ Posted by: dltravers | Sep 22, 2018 3:41:24 PM | 12

You're both wrong. The USA has been in a secular decline since at least Carter (1978) . Yes, it isn't Trump's fault the USA is decaying -- but he's no savior or economics genius either.

The thing is the Americans, contrary to the rest of the world, doesn't use the annualised rate to calculate their GDP growth, buth the quarterly rate "normalised". This leads to absurd growth rates in the USA, such as the eye-popping 4.1% growht in Q2 2018 etc. etc. (see the link above for more information).

Bill Clinton (2000) was the last POTUS which affered a quarterly growth above the peak of his predecessor, but this is easily explainable: George H. W. Bush was a one-term POTUS (a rarity post-Carter), and he governed through much of the 1990-92 recession of the Western Civilization (specially in the UK, Germany and Japan). Clinton caught pretty much the last innovation cycle capitalism could do: the internet era, which would burst precisely in 2001 (dotcom bubble). George W. Bush reaped the recovery of the recession in 2002, and the financial capital continue to growth to an apex in 2006 or 2007 (depending on the country you live): that was the last time capitalism, all things considered, could state it "delivered" (at least to the first world countries); the 2008 meltdown would only affect the "emergent economies" in the end of 2011, after 2012, capitalism stopped "delivering" to the whole world.

Notice I'm not including China (which suffered a little bit in 2009, the aftermath of the great recession). That's because China is not a capitalist country, therefore the economic rules of globalization don't apply to the Chinese in the classic way.

Putin has stated publicly at least two times that, if he could go back in time to do one thing, he would go back to 1991 and save the USSR. I will forever wonder: what if the USSR survived for 17 more years? The world would be in a completely different (much better) situation it is now.

[Sep 21, 2018] The Dollar Shortage China's Bond Selling Are About To Corner the Fed Zero Hedge Zero Hedge

Sep 21, 2018 | www.zerohedge.com

The Dollar Shortage & China's Bond Selling Are About To Corner the Fed

by Palisade Research Fri, 09/21/2018 - 19:22 8 SHARES

Via Adem Tumerkan @ Palisade-Research.com

- This is a repost of the recent Palisade Weekly Letter –

Earlier this week – news went by relatively unnoticed by the ' mainstream ' financial media (CNCB and such) that Beijing's started selling their U.S. debt holdings.

Putting it another way – they're dumping U.S. bonds. . .

"China's ownership of U.S. bonds, bills and notes slipped to $1.17 trillion, the lowest level since January and down from $1.18 trillion in June."

Remember – dumping U.S. debt is China's nuclear option (which I wrote about back in April – click here to read if you missed it ).

And although they're starting to sell U.S. bonds – expect it to be at a slow and steady pace. They don't want to risk hurting themselves over this.

I believe China may be selling just enough to get the attention of Trump and the Treasury. A soft warning for them not to take things too far with tariffs and trade.

Yet already just as news hit the wire that China was selling bonds a few days ago – U.S. yields spiked above 3%. . .


Don't forget that China's the U.S.'s largest foreign creditor. And this is an asset for them.

And although them selling is worrisome – the real problems started months ago. . .

Over the last few months, my macro research and articles are all finally coming together. This thesis we had is finally taking shape in the real world.

I wrote in a detailed piece a few months back that foreigners just aren't lending to the U.S. as much anymore ( you can read that here ).

I called this the 'silent problem'. . .

Long story short: the U.S. is running huge deficits. They haven't been this big since the Great Financial Recession of 08.

And it shouldn't come as a surprise to many.

Because of Trump's tax cuts, there's less government revenue coming in. And that means the increased military spending and other Federal spending has to be paid for on someone else's tab.

The U.S. does 'bond auctions' all the time where banks and foreigners buy U.S. debt – giving the Treasury cash to spend now.

But like I highlighted in the 'silent problem' article (seriously, read it if you haven't) – foreigners are buying less U.S. debt recently. . .

This is a serious problem because if the Treasury wants to spend more while collecting less taxes, they need to borrow heavily.

This trend's continued since 2016 and it's getting worse. And with the mounting liabilities (like pensions and social security and medicare), they'll need to borrow trillions more in the coming years.


So, in summary – the U.S. has less interested foreign creditors at a time when they need them more than ever.

But wait, it gets worse. . .

The Federal Reserve's currently tightening – they're raising rates and selling bonds via Quantitative Tightening (QT – fancy word for sucking money out of system).

This is the second big problem – and I wrote about in 'Anatomy of a Crisis' ( read here ). And even earlier than that here .

So, while the Fed does this tightening, they're creating a global dollar shortage. . .

As I wrote. . . "This is going to cause an evaporation of dollar liquidity – making the markets extremely fragile. Putting it simply – the soaring U.S. deficit requires an even greater amount dollars from foreigners to fund the U.S. Treasury . But if the Fed is shrinking their balance sheet , that means the bonds they're selling to banks are sucking dollars out of the economy (the reverse of Quantitative Easing which was injecting dollars into the economy). This is creating a shortage of U.S. dollars – the world's reserve currency – therefore affecting every global economy."

The Fed's tightening is sucking money – the U.S. dollar – out of the global economy and banks. And they're doing this at a time when Foreigners need even more liquidity so that they can buy U.S. debt.

How is the Treasury supposed to get funding if there's less dollars out there available? And how can they entice investors if Foreigners don't have enough liquidity to fund U.S. debt?

These Emerging Markets must use their dollar reserves to prop up their own currencies and economies today. They can't be worrying about funding U.S. pensions and other bloated spending when their economies are crumbling.

These two themes I've written about extensively – the decline of foreign investors and the Fed's tightening – have gotten us to this point today.

And the U.S. is extremely fragile because of both problems. . .

Here's the worst part – China probably knows this . That's why they're selling just enough U.S. bonds to spook markets.

But if the trade war and soon-to-be a currency war continues, no doubt China will sell more of their debt – sending yields soaring.

I just got done last week detailing how U.S. debt servicing costs (interest payments) are already becoming very unsustainable ( click here if you missed it ).

At this point they're literally borrowing money just to pay back old debts – that's known as a 'ponzi scheme'.

This is why I believe the Fed will eventually cut rates back to 0% – and then into negative territory. And instead of sucking money out of the economy via QT, they're going to start printing trillions more.

How else will the Treasury be able to get the funding they need?

I'll continue to keep you up to date with what's going on and how it all fits together.

But I think the two big problems I wrote about above are now converging into a new massive problem. And I don't see any way out of it unless the Fed monetizes the U.S. Treasury and outstanding debts. And that will cause massive moves in the markets.

I'm sure Trump will eventually tweet , "Oh Yeah? Foreigners don't want to buy the U.S. debt? Blasphemy! Who needs you all when we have a printing press!"

Or something like that. . .

TimeTraveller , 1 hour ago

I'm really starting to get sick of these crap reports from Palisade Research. Again they are totally wrong on so many levels.

1. China is selling Treasuries, because they are pre-empting a debt crisis in their own country and need Dollar financing for their overleveraged companies and their banking sector. Also, China is lending money to every 3rd world country that needs infrustructure for it's Belt and Road Initiative. Building ports, bridges and railways across Asia and Africa, costs money.

2. Selling Treasuries will weaken the Dollar, so making the RMB stronger. China does NOT want the RMB stronger because it erodes their exporters margins and competetiveness. Why would they want to hurt themselves just to punish their biggest customer?

To even suggest China is "using the Nuclear option" of dumping Treasuries just shows your total ignorance of the real world.

Palisade are clueless

ConanTheContrarian1 , 1 hour ago

OTOH, the crisis in Emerging Markets and the effect of capital flight on China are just two of the MANY things not mentioned in this article. There has been tension building into financial warfare between China and the US ever since they pegged the yuan low to the dollar in 1987. The US is doing things under the table to China, China to the US, and they're both quite capable of paying Adam Tumerkan (and others) to write hit pieces against the other side. Think deeply before choosing a side.

[Sep 19, 2018] A very slow decline of world supply will hit those who can't pay for it most and maybe wake up enough through higher prices to begin planning for what will be the greatest energy transition that must take place!

Sep 19, 2018 | peakoilbarrel.com

Captjohn x Ignored says: 09/12/2018 at 1:50 pm

Here is someone that does have a clue – CEO of Schlumberger:

http://www.northamericanshalemagazine.com/articles/2497/schlumberger-ceo-can-u-s-shale-meet-future-global-oil-demand

"The short-term investment focus adopted since 2014 offers a finite set of opportunities over a limited period of time, and this period is now clearly coming to an end as seen by accelerating decline rates in many countries around the world," Kibsgaard pointed out.

BAU won't get it done – no quick fixes, 'new shale revolution' or 'reserve production' to get us through – my interest is mostly how we (as a society and culture) will react as constraints on the resource 'haves' and 'have nots' set in.

Went through Irma in South Florida last Fall – and in general order was maintained – but really only out of Gas for about 3 days – and was more of a shock type shortage. A very slow decline of world supply will hit those who can't pay for it most – and maybe wake up enough through higher prices to begin planning for what will be the greatest energy transition that must take place!

George Kaplan x Ignored says: 09/14/2018 at 2:52 am
The big oil companies are selling a story of long term stability to their investors, partly so they can justify the long term investments needed for the mega-projects where they get most of their oil and cashflow (some of those see no net return for many years). They only need to sell themselves to their investors, not their customers who just buy the cheapest or most convenient, be it crude to refineries or petrol to motorists.

The service companies live more year to year – they get hired to help develop and drill a field and then their workload drops a lot except for some well servicing during operation. Schlumberger is selling itself to its customers (the 'operators' who are the E&P companies) and investors as the go to guy for the next couple of years as activity tries to pick up but faces increasing issues as the easy (and now not so easy but still OK-ish) oil goes away.

Mike Sutherland x Ignored says: 09/14/2018 at 10:22 am
Schlumberger is not a typical service provider to the producers, although that is a large portion of their business. Since their purchase of Cameron International and other oilfield manufacturing companies, they have been providing facility engineering and fabrication services to the oil producers worldwide.

In point of fact, Schlumberger does have the information that the producers have, and then some. They use those numbers as a basis for facility engineering, and as such are arguably in a better position to interpret them than the producer as of late.

I've regularly read the BP annual report, and have come to regard it as little more than a curiosity. Schlumberger, Shell and Total have a firmer grip on the world oil situation, based on my read of their CEO's comments. However that may be confirmation bias on my part. We shall see .

[Sep 19, 2018] My estimate is we are at 90% depletion for existing technology

Sep 19, 2018 | peakoilbarrel.com

conacher says: 09/14/2018 at 10:42 am

Probably the more important item is Russian reserves my estimate is we are at 90% depletion for existing technology and OIP at cost for western Russian reserves. At this point a squeeze plan in Syria would ensure foreign reserve earnings to into wars and not fuels outcome is standard wars as a result of miss spending income
kolbeinh x Ignored says: 09/14/2018 at 2:00 pm
Yes, I assume they have some problems since they reformed the tax system in favor of upstream risky projects and at the same time imposed more taxes on downstream refineries. But to assume Russia has problems is like assuming the whole world has a problem. Could be perfectly right, but why expose Russia as opposed to others? Russia has a lot of higher cost oil; just look at the land mass and offshore mass. How could there not be prospects? Some inside knowledge is sorely lacking, since I like most western people don't have connections in that part of the world.
conacher x Ignored says: 09/14/2018 at 1:38 pm
https://medium.com/insurge-intelligence/brace-for-the-financial-crash-of-2018-b2f81f85686b

only way to 'pull off above' is both Russia western province and gehwar at "90%" OIP gone.

Ron Patterson x Ignored says: 09/14/2018 at 2:49 pm
Thanks for the link Conacher. Folks this article makes a prediction that needs to be read.

Brace for the oil, food and financial crash of 2018

80% of the world's oil has peaked, and the resulting oil crunch will flatten the economy.

New scientific research suggests that the world faces an imminent oil crunch, which will trigger another financial crisis.

A report by HSBC shows that contrary to the commonplace narrative in the industry, even amidst the glut of unconventional oil and gas, the vast bulk of the world's oil production has already peaked and is now in decline; while European government scientists show that the value of energy produced by oil has declined by half within just the first 15 years of the 21st century.

The upshot? Welcome to a new age of permanent economic recession driven by ongoing dependence on dirty, expensive, difficult oil unless we choose a fundamentally different path.

Then they say: The HSBC report you need to read, now

Global Oil Supply, Will Mature Field Declines Drive Next Supply Crunch?

This thing came out two years ago. Why did I not hear about it before? Has this been posted here and talked about already?

conacher x Ignored says: 09/14/2018 at 2:56 pm
Real issue is giants, your article in 2015 real issue is 90% ..real issue is squeeze play in motion in Syria..goal? if don't have it, don't drill it at home, no rig increases so 'end game' is cut off Isreali/Saudi friendly arab gas to Europe own Caspian area (city I recall owned by Ukraine under British treaty Yelsin) in end no WW2 buildup during economic issues (Russia 5M/day, Saudi similar) no Hilter, just preempt what's left..
Carlos Diaz x Ignored says: 09/14/2018 at 5:08 pm

"This thing came out two years ago. Why did I not hear about it before? Has this been posted here and talked about already?"

Yes, it was. Here:

http://peakoilbarrel.com/open-thread-petroleum-jan-8-2017/#comment-591795

Here:

http://peakoilbarrel.com/opec-december-production-data/#comment-593747

And here:

http://peakoilbarrel.com/texas-update-january2017/#comment-594346

I downloaded it then, and just had to look at the date the file was created. You probably also have it in your hard-drive.

It provided a nice confirmation to my thesis that Peak Oil won't happen in the future. It is taking place now, and the date we entered the Peak Oil plateau was 2015. You also forecasted that, as I did.

Ron Patterson x Ignored says: 09/14/2018 at 8:14 pm
You are correct. Hey, I am 80 years old and I just can't remember shit anymore.

Okay, I posted a few days ago that I thought peak oil would be in 2019. Perhaps I was wrong. Hell, I have been wrong quite a few times. But now perhaps peak oil is right now.

Perhaps? We shall see.

But my point is everyone seems to be agreeing with me now. Old giant fields are seeing an ever increase in decline rates. I predicted this a long time ago. Once the water hits those horizontal laterals at the very top of the reservoir, the game is over.

The decline rate in those old giant fields is increasing at an alarming rate. Obviously! Fucking obviously. It could not possibly be otherwise. Thank you and goodnight.

Carlos Diaz x Ignored says: 09/15/2018 at 4:31 am
Memory is less necessary these days with internet, computers, and smart phones, where searches can be run in a moment. Don't worry too much about that.

"But my point is everyone seems to be agreeing with me now."

I discovered your blog in 2014 when looking for confirmation on my suspicion that the oil price crash was going to result in Peak Oil. I was impressed to see that you were there years before through your analyses. I have a lot of respect for you and your intellectual capacity, and I agree with you in many things, besides Peak Oil, including the population problem, and your worries about the environment.

I don't believe the world cannot increase its oil production, I just believe it won't do it. Both Saudi Arabia and Russia have the capacity to go full throttle on what they have left. Shaybah is the most recent supergiant in KSA and expected to produce until 2060 at current output. No doubt they could increase production from Shaybah by a lot, but it is not in their interest to do so. Russia lacks the capacity to quickly increase its production, but there's still plenty of oil in Eastern Siberia, so they could also produce more. Again it is also unlikely, as it would require an investment and effort that goes against their own interest.

Peak Oil is not happening because the world is trying to produce more oil and failing, it is happening by a combination of economical, geological, and political factors that could not be easily predicted and that were set in motion in the early 2000's when the low-hanging fruit of conventional on-shore and off-shore crude oil (the cheapest kind to produce) reached its production limit. Political errors, like taking out Gaddafi, added unnecessary difficulties. The collapse of Venezuela is the latest political cause. And when things start to go wrong, it never rains, but it pours.

Michael B x Ignored says: 09/15/2018 at 5:01 am
"Peak Oil is not happening because the world is trying to produce more oil and failing, it is happening by a combination of economical, geological, and political factors that could not be easily predicted and that were set in motion in the early 2000's when the low-hanging fruit of conventional on-shore and off-shore crude oil (the cheapest kind to produce) reached its production limit."

Isn't this just a distinction without a difference? It's peak oil.

Carlos Diaz x Ignored says: 09/15/2018 at 5:35 am
The issue is that Peak Oil has been misunderstood by most people. The argument that Peak Oil won't happen until this or that date because ultimate reserves are such or such, so often read in this forum, is incorrect. Even economically recoverable reserves are not decisive. To make the problem intractable there are many liquids so some might peak while others don't so discussions about Peak Oil are endless.

But it is very simple. Peak Oil is when the world no longer gets the oil it needs to keep expanding its economy. And the best way to measure it is through C+C, because crude oil is what we have been getting since the late 19th C ans is the stuff that produces everything our economy needs, from asphalt to diesel, plane fuel, and gasoline. NGL won't cut it. Biofuels won't cut it.

And Peak Oil is being determined by economical and political factors, besides the geology.

The difference matters because Peak Oil is going to get almost everybody by surprise. Most won't realize what is the cause of all the troubles we are going to get and they'll be reassured that there is plenty of oil to be extracted, which is true but irrelevant.

Michael B x Ignored says: 09/15/2018 at 6:27 am
Thanks for the reply. I also tremble at the prospect of what is to happen because of the failure of the predictions last decade. I can only describe it through an analogy (being a lay reader and a writer):

In the 2000s, people were saying that we had an ugly wound and that we had better do something about it. But instead of properly addressing the wound, we just wrapped it in gauze, and when the blood stopped showing through, we said, "See? All better." That's my analogy for the "shale revolution" -- it was essentially a Bandaid. The complacency has only worsened in the last ten years.

This has just made the infection all the worse. When pus starts showing through the dressing and we unwrap it this time -- we're going to find gangrene.

Carlos Diaz x Ignored says: 09/15/2018 at 7:39 am
Michael,

I am re-reading Joseph Tainter's 1998 book "The collapse of complex societies." It is a sober reading that shows that in the end the laws of entropy and diminishing returns always produce the same result. We are not more intelligent than the people that preceded us. If anything we can only be stupider on average. We just have a very high opinion of ourselves.

Time for a wake up and a little bit more darwinism in our lives. The problem is the pain. With so many people it is just going to be unbearable. On a scale never imagined, not even by writers of bad sci-fi.

Guym x Ignored says: 09/16/2018 at 9:20 am
That would be a more important definition of peak oil to me, and I think we are definitely there. Then we have the absolute production definition, which was the original definition, as to production. It is now anticlimactic to your definition. As to the date or year it happens, who cares? More importantly, now, is when demand will lower enough to stop draining inventories. At what oil price will that start occurring? How fast will alternate sources replace unmet demand? New directions and everyone is likely to be wrong on estimates. EIA and IEA were totally useless before, and that will probably not change in the near future. Looking in the past won't give us much, and the future is anybody's guess.

As to current prices, $68 oil won't get any extra interest from E&Ps outside of the Permian that is stalled. To any measurable extent. Close to $80 oil is not expanding interest very much outside of the US. We are just living on borrowed time.

Dennis Coyne x Ignored says: 09/17/2018 at 9:13 am
Guym,

Oil prices are likely to continue to rise, especially if your estimates of future production (roughly similar to my estimates, but perhaps a bit more pessimistic) are correct, unless consumption of oil stops increasing. My guess is that oil (C+C) consumption will continue to increase at 400 to 800 kb/d each year , until oil prices get to about $150/b or more (around 2025 to 2027),by that time or soon after ( maybe 2030) oil consumption growth may stop either because of the expansion of electric and natural gas powered transport or because of a second Great Financial Crisis. My hope is it will be the former, but I think the latter scenario is much more likely.

Hopefully Keynes' General Theory will make a comeback before then.

It is a dollar on Kindle

https://www.amazon.com/General-Theory-Employment-Interest-Illustrated-ebook/dp/B018055I7Q/ref=tmm_kin_swatch_0?_encoding=UTF8&qid=&sr=

TechGuy x Ignored says: 09/18/2018 at 1:43 am
Ron Wrote:
"I predicted this a long time ago. Once the water hits those horizontal laterals at the very top of the reservoir, the game is over. "

FWIW: That's already happened. when it occurs, they drill a new horizontal above the old one. The new lateral also have valves on there ports. so that when the water breaches one or more of the ports, they shut them off to reduce water cut. I posted Saudi Aramco tech articles here back between 2014 and 2016 when they were available on the SA website.

Survivalist x Ignored says: 09/14/2018 at 11:32 pm
Hi Carlos, thanks for the trip down memory lane. I tend to agree with peak oil being now (ish). From what I recall the peak month for C+C was, so far, in November 2016. I suppose there is also a peak day, a peak weak, and a peak year. Folks seem to like packaging time in various proportions. Hell, there's probably a peak decade and a peak hour. My guess is the peak year will be 2018. I like, because I'm a bit thick at maths, how Ron has added trailing 12 month average to his world production chart. I just look at the 12 month trailing average for each December to get an idea of how much was produced in each calendar year. It seems that 12 month trailing average for December 2018 will beat that of 2017. My guess is 2019 won't beat 2018. Or will any other year after that. So, if Ron say's 2019, and I say 2018, then it seems that I think he is wrong lol he's probably 100 times smarter than me so doesn't lose sleep over it lol. Up until this time I have always agreed with Ron on peak oil. But now, I throw down the gauntlet! 2018 vs 2019. Two will enter, one will leave.
Carlos Diaz x Ignored says: 09/15/2018 at 5:08 am
Hi Survivalist,

The exact week, month, or year when maximal production is reached has only historical interest. The point is that since the end of 2015 the 12-month averaged C+C production has barely increased (EIA data) despite the increase in demand.

Dec 2015 80,564 100.0%
Dec 2016 80,579 100.0%
Dec 2017 80,936 100.5%
Apr 2018 81,363 101.0%

We will have to see how it evolves over to the next December, but so far it is annualized to a 0.4% increase. To me we are in a bumpy plateau since late 2015 and all those meager gains and more will be lost in the next crisis. The problem will be evident to many when after the crisis we are not able to increase production above those values.

Peak Oil is a situation, not a date, and we are in that situation since late 2015. The oil that the world demands cannot be produced so prices are going up, and up. I suppose it is possible that the powers that be intervene to reduce global oil demand by favoring a crisis in developing countries, like Argentina, Brazil, Turkey, South Africa, through interest rate changes. Wait, it is already happening. It is a dangerous tactic, as crises can spread around, and the interest rise weakens the economy.

Dennis coyne x Ignored says: 09/15/2018 at 8:59 am
Carlos,

Well one has to define the plateau a bit better. If we make the bounds wide enough one could say the peak was 2005 or even 1980 and we have been on a bumpy plateau since that point.

Better in my view to define peak as peak in centered 12 month average output wth center between month 6 and 7.

Carlos Diaz x Ignored says: 09/15/2018 at 12:42 pm
Dennis,

I use a 13-month centered average, so it is symmetrical with 6 months at each side.

But really, after a clear period of production growth 2010-2014, there was a strong growth in production 2014-2015 in response to falling prices, and then production got stuck in late 2015.

It is not a question if we are in a plateau (or very reduced growth) period, but what happens afterwards. After the previous plateau 2005-2009 there was a clear fall 2009-2010, before tight oil saved the day.

Dennis Coyne x Ignored says: 09/17/2018 at 9:23 am
Carlos,

The recent plateau is due to excess inventory and the resulting low oil price level. Oil inventories have been reduced over the past 12 to 18 months and as oil prices increase, output will also increase with perhaps a 6 to 12 month lag. How much will it need to rise above the Dec 2015 level before you no longer consider that output has not risen above your "plateau". Give me a number, is it 81.5 Mb/d, 82 Mb/b, I prefer to use a year rather than 13 months, that's 182 days on either side of the middle of the 12 month period. On leap years we can use Midnight of day 183 🙂

Dennis coyne x Ignored says: 09/14/2018 at 8:11 pm
One issue that has been corrected is that reserve requirements for large banks have increased.

Also lenders are more careful with their mortgages making a housing bubble less likely.

In addition, the assumption that higher oil prices played a major role in the GFC is incorrect.

Perhaps there is a looming recession, whether this happens in 2018, 2030 or some other year we will only know when it occurs.
Someone who predicts a recession every year will be right eventually.

I maintain my guess of 2023 to 2027 for the 12 month centered average c+c peak and severe recession GFC2 starting 2029 to 2033, lasting 5 to 7 years.

[Sep 19, 2018] This is so ridiculous it is funny. Oil discoveries have been going down, down, and down, way below replacement level. Yet so-called "proven" reserves keep going up, up and up.

Sep 19, 2018 | peakoilbarrel.com

George Kaplan

x Ignored says: 09/15/2018 at 6:14 am Some interesting figures from the OPEC annual statistical review earlier this year that I missed when it came out: https://asb.opec.org/index.php/interactive-charts

First crude only peaked in 2016, with 2017 below 2016 and 2015.

Reply


George Kaplan x Ignored says: 09/15/2018 at 6:15 am

Second oil reserves have been flat since around 2010, and declining recently for the first time since the 1970s. Note, before someone points it out, they don't count Canadian Bitumen.

Ron Patterson x Ignored says: 09/15/2018 at 9:23 am
This is so ridiculous it is funny. Oil discoveries have been going down, down, and down, way below replacement level. Yet so-called "proven" reserves keep going up, up and up.

Timthetiny x Ignored says: 09/17/2018 at 1:03 am
That's to be expected.
TechGuy x Ignored says: 09/18/2018 at 2:00 am
"This is so ridiculous it is funny. Oil discoveries have been going down, down, and down, way below replacement level. Yet so-called "proven" reserves keep going up, up and up."

Well to some degree, technology has been able to extract more oil from a field. Thus a field discovered in 1950 with an initial proven reserve of 100mbbls, may have 125mbbls or proven reserves as technology has improved recovery rates. That said technology improvements likely don't match the paper proven reserves.

Fernando Leanme x Ignored says: 09/15/2018 at 9:44 am
The Venezuelan heavy oil reserves are overstated (I assume the large bump prior to 2010 is the booking of the Magna Reserva in the Orinoco Oil belt, which i know are fake). It's fairly easy to eyeball the better number by substracting 300 billion a flat line around 1200. If you want to add future bookings in that heavy oil belt, add up to 50 billion gradually. Dont forget that at the current decline rate Venezuela will be producing about 1.1 million BOPD in december, and IF things go as I think they will sometime in the first half of 2019 exports will drop to zero for a few months.
George Kaplan x Ignored says: 09/15/2018 at 6:15 am
Third gas reserves also flat. If condensate and NGLs have been meeting the increased demand that crude has been unable to, then that might be about to stop.

[Sep 15, 2018] Has that system dynamic changed/evolved seriously since the Roman era? We have usury. We have inheritance. We have banking. The concept of private property evolved along with the mythical moral fig leaf of rule-of-law. We call it the Western form of "civilization".

Sep 15, 2018 | www.moonofalabama.org

psychohistorian , Sep 15, 2018 7:51:52 PM | link

@ Lochearn who is correcting my genealogical representation of empire

Yes, you are more correct than I. That said, does it go back even further to the founding of monotheistic religions? We are referring to social control by an elite in my mind more than the Jewish bankers part of your genealogy. I admit to the bankers part but see that bankers group as the encourage/control entity for the other monotheistic religions.

Has that system dynamic changed/evolved seriously since the Roman era? We have usury. We have inheritance. We have banking. The concept of private property evolved along with the mythical moral fig leaf of rule-of-law. We call it the Western form of "civilization".

Jen , Sep 15, 2018 8:01:37 PM | link

Psycho Historian: I have been reading a Great Courses book on the history of the Achaemenid rmpire that ruled Persia and one interesting tidbit from my reading is that temples and their priests made loans to property (though turned did not accept deposits). So religious institutions got into the banking business early.

karlof1 , Sep 15, 2018 8:13:22 PM | link

Jen @27--

In his talks about his upcoming book, Hudson has said that besides the Palace the Temples were the first sources of credit. But their relation to society then vastly differs from what evolved as both Palace and Temple become corrupted by greed.

jrkrideau , Sep 15, 2018 9:03:58 PM | link

@ 27 Jen

So religious institutions got into the banking business early.

Achaemenids? I think this was rather late. IIRC temples in Ur, Sumer and Babylon were in the business long before the Achaemenid period.

However Ur, Sumer and Babylon also seem to have had a general debt amnesty about every 7 years. There was a sound political or economic rationale for this. Something about the idea that one was not supposed to grind the faces of the poor into the gravel, nor destroy the fabric of society.

The temples were the only organizations that had the administrative ability to do this. Temple, at least in Mesopotamia is a bit of a misnomer. As I understand it, the "temple" was the home of the god, the royal palace and the seat of the civil service all rolled into one.

You might find David Graeber's book Debt : The First 5,000 Years interesting. He discusses why the temples were in the money lending business. It's a rather fun read and comes in hard cover and completely free pdf.
https://libcom.org/files/__Debt__The_First_5_000_Years.pdf

did not accept deposits

I never thought of it, but yes of course. Given their functions they would not take deposits. They were loaning from state resources and did not need deposits. They would not have even understood the concept.

I am not sure if this applies during the Achaemenid period but it seems likely.

[Sep 14, 2018] The entire neoliberal system is disintegrating fast. The world is already a completely different place from a year ago. The elite are in such a panic that everything they do makes things worse and increases the speed of the collapse.

Sep 14, 2018 | www.moonofalabama.org

BM , Sep 13, 2018 12:04:12 PM | 23 ">link

The insane things that are happening these days are a manifestation of the dire status of Empire.

The Skripal farce is the perfect microcosm of everything that is happening in the world geopolitically. The UK have now accused two innocent and naive tourists, and probably soon it will be proved beyond doubt that they were innocent tourists.

Erdogan is being blackmailed by the US into falling on his own sword, and will continue to flip-flop between the US and Russia. He obviously knows that siding with the US is suicide, but the US are trying to ensure that siding with Russia will also be suicide.

In their insane panic, the US, UK and Israel are all committing suicide. Everything they do is massively and comprehensively non-viable. Probably the top elite refuse the advice of their top advisors; it's even possible some of the top advisors themselves have decided to hasten the fall because they are so fed up with the scale of the degeneration.

The primordial goal of Russia and China is to dampen the bang as the West implodes and try to prevent global nuclear war.

The entire western system is disintegrating fast. The world is already a completely different place from 3 months ago. The elite are in such a panic everything they do makes things worse and increases the speed of the collapse. They are virtually in freefall (and perhaps soon will be).

[Sep 10, 2018] Trump was able to harness and give voice to some very important forces working against classic neoliberalism

Notable quotes:
"... Serious border enforcement, demanding our wealthy allies do more for their own security, infrastructure investment, the (campaign's) refutation of Reaganomics, acknowledging the costs of globalism, calling BS on all of the dominant left PC pieties and lies, were themes of Trump's campaign that were of value. ..."
Sep 10, 2018 | www.theamericanconservative.com

EarlyBird September 7, 2018 at 7:12 pm

Serious border enforcement, demanding our wealthy allies do more for their own security, infrastructure investment, the (campaign's) refutation of Reaganomics, acknowledging the costs of globalism, calling BS on all of the dominant left PC pieties and lies, were themes of Trump's campaign that were of value.

Trump was able to harness and give voice to some very important energies. But being Trump, he's poisoned these issues for a couple of generations. No serious leader will be able to touch these things.

Add this to all the institutional and political ruin he has created.

[Sep 07, 2018] Scientists Warn the UN of Capitalism's Imminent Demise

Sep 07, 2018 | news.slashdot.org

a new report commissioned by a group of scientists appointed by the UN Secretary-General . From a report: The main reason? We're transitioning rapidly to a radically different global economy, due to our increasingly unsustainable exploitation of the planet's environmental resources.

Climate change and species extinctions are accelerating even as societies are experiencing rising inequality, unemployment, slow economic growth, rising debt levels, and impotent governments.

Contrary to the way policymakers usually think about these problems, the new report says that these are not really separate crises at all.

Rather, these crises are part of the same fundamental transition to a new era characterized by inefficient fossil fuel production and the escalating costs of climate change.

Conventional capitalist economic thinking can no longer explain, predict, or solve the workings of the global economy in this new age, the paper says [PDF] .

[Sep 07, 2018] Latin America- Rightwing Interlude and the Death Rattle of Neoliberalism by James Petras

Notable quotes:
"... By the beginning of 2015 and extending to 2018 a series of rightwing neo-liberal regimes came to power in some of the most important countries of Latin America. These included Argentina, Brazil, Ecuador and Colombia. They joined a cluster of existing 'free market' regimes in Mexico, Peru, Honduras and Paraguay. ..."
"... Neo-liberal regimes take power with Wall Street cheers and collapse with barely a whimper. ..."
"... While financial journalists and private investment consultants express surprise and attribute the ensuring crises to regime 'mistakes' and 'mismanagement', the real reasons for the predictable failure of neo-liberal regimes is a result of fundamental flaws. ..."
"... De-regulation undermines local industries which cannot compete with Asian, US and EU manufacturers. Increases in the costs of utilities bankrupt small and medium producers. Privatization deprives the state of revenues for public financing. Austerity programs lower deficits, undermining domestic consumption and eliminate fiscal financing. ..."
Sep 04, 2018 | www.unz.com

Introduction

Business writers, neo-liberal economists and politicians in North America and the EU heralded Latin America's embrace of a 'new wave of free markets and free elections'. Beginning in 2015 they predicted a new era of growth, stability and good government free of corruption and run by technocratic policy-makers.

By early 2018 the entire neo-liberal edifice was crumbling, the promises and predictions of a neo-liberal success story were forgotten. The 'naysayers' were in ascendancy.

This paper will discuss the recent rise of a so-called 'neo-liberal wave' or right turn and the regimes directing it.

We will critically re-evaluate the initial claims – and their fragile foundation.

We will outline the promise and program which were promoted by the neo-liberal elite.

We will then evaluate the results which ensured and the ultimate debacle.

We will conclude by examining why neo-liberalism has always been a crisis ridden project, a regime whose fundamentals are structurally unstable and based on capitalisms easy entry and fast departures.

The Neo-liberal 'Wave'

By the beginning of 2015 and extending to 2018 a series of rightwing neo-liberal regimes came to power in some of the most important countries of Latin America. These included Argentina, Brazil, Ecuador and Colombia. They joined a cluster of existing 'free market' regimes in Mexico, Peru, Honduras and Paraguay.

Wall Street, the financial press and the White House hailed the regime changes as a 'rightwing wave', a return to 'normalcy' and a rejection of 'populism', corruption and economic mismanagement.

Leading investment houses looked forward to technocratic economists' intent on following the precepts of neo-liberalism.

Bankers and investors looked forward to long-term stability, dynamic growth and lucrative opportunities.

The Neo-liberal Program

The formulae uniformly applied by the neo-liberal regimes included de-regulation of the economy – lowering tariffs, elimination of subsidies on energy, fuels and public utilities; the firing of thousands of public employees and the privatization of entire sectors of the mining, energy telecoms and infrastructure sectors.

Debt moratoriums ended and bankers were rewarded with lucrative billion dollar payments for loans they had purchased, pennies on a dollar.

The neo-liberal rulers promised that foreign investors would flock through the 'open doors' with long-term large-scale investments. Lucrative capital gains , benefiting from tax exemptions, would encourage the return of overseas holdings of domestic speculators.

Neo-liberal regimes claimed privatized firms could end corruption, increase employment and mass consumption. They argued that deficits and unemployment, would decline and the 'neo-liberal wave' would last a generation or two.

Neo-liberalism: Wave or Wash-out?

Within a year of coming to power, the neo-liberal regimes entered a terminal crisis.

In the first place most regimes came to power through authoritarian paths. In Brazil, Michel Temer took-over the presidency via a congressional coup, based on President Dilma Rousseff's supposed administrative mismanagement. In Honduras a US backed military coup ousted the progressive liberal government of President Jose Manuel Zelaya, as was the case in Paraguay with President Fernando Lugo. In Argentina, Mauricio Macri exploited the provincial patronage machine, capitalized by a banker-media-agro-mineral alliance, to take power based on a Mexican-style 'electoral' process.

In Ecuador newly elected President Lenin Moreno followed a "Trojan Horse" ploy – pretended to follow in the footsteps of national populist President Rafael Correa, but once elected, embraced the Guayaquil oligarchs- Wall Street bankers.

Neo-liberalism's democratic credentials are of dubious legitimacy.

The socio-economic policies quickly undermined optimistic promises and led to social-economic disasters. The neo-liberal regime in Argentina multiplied unemployment and under-employment twice over while living standards declined precipitously. Tens of thousands of public employees were fired. Interest rates rose to world highs at 65% – effectively eliminating business loans and financing.

Initially business enterprises which were eager to back the neo-liberal regime; but faced with devaluation, debt and depression, investors fled to safer havens after pocketing windfall profits.

In Brazil trucker strikes paralyzed activity and forced the Temer regime to retract its petrol prices.

Popular discord has blocked Temer's regressive privatization and pension program.

Michel Temer's popularity fell to single digits. The orthodox economic presidential replacements to Temer lag the Workers' Party popular leader Lula Da Silva by 30% .The highly neoliberalized judiciary , faced with repudiation, has framed and barred and jailed Lula

In Colombia regime corruption led to a popular referendum, opposed by the far right. Social movements charge the new neo-liberal President Ivan Duque of ignoring and encouraging the assassination of over three hundred social activists over the past three years.

In Honduras and Paraguay, economic stagnation and social regression has driven tens of thousands to flee abroad or engage in militant movements occupying fallow fields.

In Ecuador the fake reform regime's embrace of the business elite and IMF style 'adjustments' has led to wide spread disillusionment. President Moreno's austerity program has reduced GDP to 1% and has dismantled public programs, as he lays the groundwork for privatizing mines, telecoms and banks.

As the neo-liberal regimes face the abyss, they increasingly rely on a militarized state. In Brazil the military has taken over the favelas; in Argentina military operations have proliferated -- - while formerly productive capital has fled, replaced by speculative swindlers.

Conclusion

Neo-liberal regimes take power with Wall Street cheers and collapse with barely a whimper.

While financial journalists and private investment consultants express surprise and attribute the ensuring crises to regime 'mistakes' and 'mismanagement', the real reasons for the predictable failure of neo-liberal regimes is a result of fundamental flaws.

De-regulation undermines local industries which cannot compete with Asian, US and EU manufacturers. Increases in the costs of utilities bankrupt small and medium producers. Privatization deprives the state of revenues for public financing. Austerity programs lower deficits, undermining domestic consumption and eliminate fiscal financing.

Capital flight and rising interest rates increases the cost of borrowing and devalues the currency.

Devaluations and capital flight deepen the recession and increase inflation. Finance ministers raid reserves to avoid a financial crash.

Austerity, stagnation, unemployment and social regression provokes labor interest and public-sector strikes. Consumer discontent, bankruptcies lead to deep decline of regime popularity.

As the crises unfolds, the regime reshuffles ministers, increases repression and seeks salvation with IMF financing.

Financiers balk sending good money after bad. The neo-liberal regimes enter in a terminal crisis.

While current neo-liberal regimes appear moribund, they still retain state power, a modicum of elite influence and a capacity to exploit internal divisions among their adversaries.

The anti-neoliberal opposition demonstrates its strength in challenging socio-economic policies but have difficulty in formulating an alternative political economic strategy for state power.Financial editors worry that pressure is building for a social explosion –a reply of Argentina 2001,when the President fled in a helicopter.

[Sep 04, 2018] Kunstler Warns -Some Kind Of Epic National Restructuring Is In The Works

Highly recommended!
Notable quotes:
"... The shale oil "miracle" was a stunt enabled by supernaturally low interest rates, i.e. Federal Reserve policy. Even The New York Times said so yesterday ( The Next Financial Crisis Lurks Underground ). ..."
"... As with shale oil, they depend largely on dishonest financial legerdemain. They are also threatened by the crack-up of globalism, and its 12,000-mile supply lines, now well underway. Get ready for business at a much smaller scale. ..."
"... Hard as this sounds, it presents great opportunities for making Americans useful again, that is, giving them something to do, a meaningful place in society, and livelihoods. ..."
"... Pervasive racketeering rules because we allow it to, especially in education and medicine. Both are self-destructing under the weight of their own money-grubbing schemes. ..."
"... A lot of colleges will go out of business. Most college loans will never be paid back (and the derivatives based on them will blow up) ..."
"... The leviathan state is too large, too reckless, and too corrupt. Insolvency will eventually reduce its scope and scale. Most immediately, the giant matrix of domestic spying agencies has turned on American citizens. ..."
"... It will resist at all costs being dismantled or even reined in. One task at hand is to prosecute the people in the Department of Justice and the FBI who ran illegal political operations in and around the 2016 election. These are agencies which use their considerable power to destroy the lives of individual citizens. Their officers must answer to grand juries. ..."
"... As with everything else on the table for debate, the reach and scope of US imperial arrangements has to be reduced. ..."
Sep 04, 2018 | www.zerohedge.com

Authored by James Howard Kunstler via Kunstler.com,

And so the sun seems to stand still this last day before the resumption of business-as-usual, and whatever remains of labor in this sclerotic republic takes its ease in the ominous late summer heat, and the people across this land marinate in anxious uncertainty.

What can be done?

Some kind of epic national restructuring is in the works. It will either happen consciously and deliberately or it will be forced on us by circumstance. One side wants to magically reenact the 1950s; the other wants a Gnostic transhuman utopia. Neither of these is a plausible outcome.

Most of the arguments ranging around them are what Jordan Peterson calls "pseudo issues." Let's try to take stock of what the real issues might be.

Energy

The shale oil "miracle" was a stunt enabled by supernaturally low interest rates, i.e. Federal Reserve policy. Even The New York Times said so yesterday ( The Next Financial Crisis Lurks Underground ).

For all that, the shale oil producers still couldn't make money at it. If interest rates go up, the industry will choke on the debt it has already accumulated and lose access to new loans. If the Fed reverses its current course - say, to rescue the stock and bond markets - then the shale oil industry has perhaps three more years before it collapses on a geological basis, maybe less. After that, we're out of tricks. It will affect everything.

The perceived solution is to run all our stuff on electricity, with the electricity produced by other means than fossil fuels , so-called alt energy. This will only happen on the most limited basis and perhaps not at all. (And it is apart from the question of the decrepit electric grid itself.) What's required is a political conversation about how we inhabit the landscape, how we do business, and what kind of business we do. The prospect of dismantling suburbia -- or at least moving out of it -- is evidently unthinkable. But it's going to happen whether we make plans and policies, or we're dragged kicking and screaming away from it.

Corporate tyranny

The nation is groaning under despotic corporate rule. The fragility of these operations is moving toward criticality. As with shale oil, they depend largely on dishonest financial legerdemain. They are also threatened by the crack-up of globalism, and its 12,000-mile supply lines, now well underway. Get ready for business at a much smaller scale.

Hard as this sounds, it presents great opportunities for making Americans useful again, that is, giving them something to do, a meaningful place in society, and livelihoods.

The implosion of national chain retail is already underway. Amazon is not the answer, because each Amazon sales item requires a separate truck trip to its destination, and that just doesn't square with our energy predicament. We've got to rebuild main street economies and the layers of local and regional distribution that support them. That's where many jobs and careers are.

Climate change is most immediately affecting farming. 2018 will be a year of bad harvests in many parts of the world. Agri-biz style farming, based on oil-and-gas plus bank loans is a ruinous practice, and will not continue in any case. Can we make choices and policies to promote a return to smaller scale farming with intelligent methods rather than just brute industrial force plus debt? If we don't, a lot of people will starve to death. By the way, here is the useful work for a large number of citizens currently regarded as unemployable for one reason or another.

Pervasive racketeering rules because we allow it to, especially in education and medicine. Both are self-destructing under the weight of their own money-grubbing schemes. Both are destined to be severely downscaled.

A lot of colleges will go out of business. Most college loans will never be paid back (and the derivatives based on them will blow up).

We need millions of small farmers more than we need millions of communications majors with a public relations minor. It may be too late for a single-payer medical system. A collapsing oil-based industrial economy means a lack of capital, and fiscal hocus-pocus is just another form of racketeering. Medicine will have to get smaller and less complex and that means local clinic-based health care. Lots of careers there, and that is where things are going, so get ready.

Government over-reach

The leviathan state is too large, too reckless, and too corrupt. Insolvency will eventually reduce its scope and scale. Most immediately, the giant matrix of domestic spying agencies has turned on American citizens.

It will resist at all costs being dismantled or even reined in. One task at hand is to prosecute the people in the Department of Justice and the FBI who ran illegal political operations in and around the 2016 election. These are agencies which use their considerable power to destroy the lives of individual citizens. Their officers must answer to grand juries.

As with everything else on the table for debate, the reach and scope of US imperial arrangements has to be reduced. It's happening already, whether we like it or not, as geopolitical relations shift drastically and the other nations on the planet scramble for survival in a post-industrial world that will be a good deal harsher than the robotic paradise of digitally "creative" economies that the credulous expect.

This country has enough to do within its own boundaries to prepare for survival without making extra trouble for itself and other people around the world. As a practical matter, this means close as many overseas bases as possible, as soon as possible.

As we get back to business tomorrow, ask yourself where you stand in the blather-storm of false issues and foolish ideas, in contrast to the things that actually matter.

[Sep 01, 2018] The Suicidal American Empire Is Collapsing Fast, But Its Death Now Would Cause Unacceptable Collateral Damage. Which is why its vassals and even rivals are forced, for now, to try and keep it afloat

The destiny of the US empire is interlined with destiny of neoliberalism. This is important point that Orlov misses. As long as neoliberal social system is the only game in town, I think attempt of Russia and china to depose the US empire will be futile.
Trump just represents an evolution of neoliberalism toward what can be called "national neoliberalism", where classic neoliberal globalization is thrown out of the windows (or somewhat diminished) in favor of bilateral treaties and sanctions for non-compliant vassals, one country at a time.
Notable quotes:
"... There are a lot of behaviors being exhibited by those in positions of power in the US that seem disparate and odd. We watch Trump who is imposing sanctions on country after country, dreaming of eradicating his country's structural trade deficit with the rest of the world. ..."
"... A lengthening list of countries are set to ignore or compensate for US sanctions, especially sanctions against Iranian oil exports. In a signal moment, Russia's finance minister has recently pronounced the US dollar "unreliable." Meanwhile, US debt keeps galloping upwards, with its largest buyer being reported as a mysterious, possibly entirely nonexistent "Other." ..."
"... the key point: if this were to happen today, it would cause unacceptable levels of political and economic collateral damage around the world. Does this mean that the US is indispensable? ..."
"... Empires do all sorts of evil things -- up to and including genocide -- but they also provide a level playing field and a method for preventing petty grievances from escalating into tribal conflicts ..."
"... The American empire is a bit more nuanced: it uses the US dollar as a weapon for periodically expropriating savings from around the world by exporting inflation while annihilating anyone who tries to wiggle out from under the US dollar system. ..."
"... What we have in permanent surplus is revolutionaries: if they have their way, look out for a Reign of Terror, followed by the rise of a Bonaparte. That's what happens every time. ..."
"... est you think that the US isn't an empire -- a collapsing one -- consider the following. The US defense budget is larger than that of the next ten countries combined, yet the US can't prevail even in militarily puny Afghanistan ..."
"... It claims the entire planet as its dominion : no matter where you go, you still have to pay US income taxes and are still subject to US laws ..."
"... It controls and manipulates governments in numerous countries around the world, always aiming to turn them into satrapies governed from the US embassy compound, but with results that range from unprofitable to embarrassing to lethal. It is now failing at virtually all of these things, threatening the entire planet with its untimely demise. ..."
"... None of the old methods of maintaining imperial dominance are working; all that remains is the threat of falling down and leaving a huge mess for the rest of the world to deal with. The rest of the world is now tasked with rapidly creating a situation where the US empire can be dealt a coup de grâce safely, without causing any collateral damage -- and that's a huge task, so everyone is forced to play for time. ..."
Sep 01, 2018 | www.newyorker.com

There are a lot of behaviors being exhibited by those in positions of power in the US that seem disparate and odd. We watch Trump who is imposing sanctions on country after country, dreaming of eradicating his country's structural trade deficit with the rest of the world.

We watch pretty much all of US Congress falling over each other in their attempt to impose the harshest possible sanctions on Russia. People in Turkey, a key NATO country, are literally burning US dollars and smashing iPhones in a fit of pique.

Confronted with a new suite of Russian and Chinese weapons systems that largely neutralize the ability of the US to dominate the world militarily, the US is setting new records in the size of its already outrageously bloated yet manifestly ineffectual defense spending. As a backdrop to this military contractor feeding frenzy, the Taliban are making steady gains in Afghanistan, now control over half the territory, and are getting ready to stamp "null and void," in a repeat of Vietnam, on America's longest war.

A lengthening list of countries are set to ignore or compensate for US sanctions, especially sanctions against Iranian oil exports. In a signal moment, Russia's finance minister has recently pronounced the US dollar "unreliable." Meanwhile, US debt keeps galloping upwards, with its largest buyer being reported as a mysterious, possibly entirely nonexistent "Other."

Although these may seem like manifestations of many different trends in the world, I believe that a case can be made that these are all one thing: the US -- the world's imperial overlord -- standing on a ledge and threatening to jump, while its imperial vassals -- too many to mention -- are standing down below and shouting "Please, don't jump!" To be sure, most of them would be perfectly happy to watch the overlord plummet and jelly up the sidewalk. But here is the key point: if this were to happen today, it would cause unacceptable levels of political and economic collateral damage around the world. Does this mean that the US is indispensable?

No, of course not, nobody is. But dispensing with it will take time and energy, and while that process runs its course the rest of the world is forced to keep it on life support no matter how counterproductive, stupid and demeaning that feels.

What the world needs to do, as quickly as possible, is to dismantle the imperial center, which is in Washington politically and militarily and in New York and London financially, while somehow salvaging the principle of empire. "What?!" you might exclaim, "Isn't imperialism evil." Well, sure it is, whatever, but empires make possible efficient, specialized production and efficient, unhindered trade over large distances. Empires do all sorts of evil things -- up to and including genocide -- but they also provide a level playing field and a method for preventing petty grievances from escalating into tribal conflicts.

The Roman Empire, then Byzantium, then the Tatar/Mongol Golden Horde, then the Ottoman Sublime Porte all provided these two essential services -- unhindered trade and security -- in exchange for some amount of constant rapine and plunder and a few memorable incidents of genocide. The Tatar/Mongol Empire was by far the most streamlined: it simply demanded "yarlyk" -- tribute -- and smashed anyone who attempted to rise above a level at which they were easy to smash. The American empire is a bit more nuanced: it uses the US dollar as a weapon for periodically expropriating savings from around the world by exporting inflation while annihilating anyone who tries to wiggle out from under the US dollar system.

All empires follow a certain trajectory. Over time they become corrupt, decadent and enfeebled, and then they collapse. When they collapse, there are two ways to go. One is to slog through a millennium-long dark age -- as Western Europe did after the Western Roman Empire collapsed. Another is for a different empire, or a cooperating set of empires, to take over, as happened after the Ottoman Empire collapsed. You may think that a third way exists: of small nations cooperating sweetly and collaborating successfully on international infrastructure projects that serve the common good. Such a scheme may be possible, but I tend to take a jaundiced view of our simian natures.

We come equipped with MonkeyBrain 2.0, which has some very useful built-in functions for imperialism, along with some ancillary support for nationalism and organized religion. These we can rely on; everything else would be either a repeat of a failed experiment or an untested innovation. Sure, let's innovate, but innovation takes time and resources, and those are the exact two things that are currently lacking. What we have in permanent surplus is revolutionaries: if they have their way, look out for a Reign of Terror, followed by the rise of a Bonaparte. That's what happens every time.

Lest you think that the US isn't an empire -- a collapsing one -- consider the following. The US defense budget is larger than that of the next ten countries combined, yet the US can't prevail even in militarily puny Afghanistan. (That's because much of its defense budget is trivially stolen.)

The US has something like a thousand military bases, essentially garrisoning the entire planet, but to unknown effect. It claims the entire planet as its dominion : no matter where you go, you still have to pay US income taxes and are still subject to US laws.

It controls and manipulates governments in numerous countries around the world, always aiming to turn them into satrapies governed from the US embassy compound, but with results that range from unprofitable to embarrassing to lethal. It is now failing at virtually all of these things, threatening the entire planet with its untimely demise.

What we are observing, at every level, is a sort of blackmail: "Do as we say, or no more empire for you!" The US dollar will vanish, international trade will stop and a dark age will descend, forcing everyone to toil in the dirt for a millennium while mired in futile, interminable conflicts with neighboring tribes.

None of the old methods of maintaining imperial dominance are working; all that remains is the threat of falling down and leaving a huge mess for the rest of the world to deal with. The rest of the world is now tasked with rapidly creating a situation where the US empire can be dealt a coup de grâce safely, without causing any collateral damage -- and that's a huge task, so everyone is forced to play for time.

There is a lot of military posturing and there are political provocations happening all the time, but these are sideshows that are becoming an unaffordable luxury: there is nothing to be won through these methods and plenty to be lost. Essentially, all the arguments are over money. There is a lot of money to be lost. The total trade surplus of the BRICS countries with the West (US+EU, essentially) is over a trillion dollars a year. SCO -- another grouping of non-Western countries -- comes up with almost the same numbers. That's the amount of products these countries produce for which they currently have no internal market. Should the West evaporate overnight, nobody will buy these products. Russia alone had a 2017 trade surplus of $116 billion, and in 2018 so far it grew by 28.5%. China alone, in its trade just with the US, generated $275 billion in surplus. Throw in another $16 billion for its trade with the EU.

Those are big numbers, but they are nowhere near enough if the project is to build a turnkey global empire to replace US+EU in a timely manner. Also, there are no takers. Russia is rather happy to have shed its former Soviet dependents and is currently invested in building a multilateral, international system of governance based on international institutions such as SCO, BRICS and EAEU. Numerous other countries are very interested in joining together in such organizations: most recently, Turkey has expressed interest in turning BRICS into BRICTS. Essentially, all of the post-colonial nations around the world are now forced to trade away some measure of their recently won independence, essentially snatching defeat from the jaws of victory. The job vacancy of Supreme Global Overlord is unlikely to attract any qualified candidates.

What everyone seems to want is a humble, low-budget, cooperative global empire, without all of the corruption and with a lot less life-threatening militarism. It will take time to build , and the resources to build it can only come from one place: from gradually bleeding US+EU dry. In order to do this, the wheels of international commerce must continue to spin. But this is exactly what all of the new tariffs and sanctions, the saber-rattling and the political provocations, are attempting to prevent: a ship laden with soya is now doing circles in the Pacific off the coast of China; steel I-beams are rusting at the dock in Turkey

But it is doubtful that these attempts will work. The EU has been too slow in recognizing just how pernicious its dependence on Washington has become, and will take even more time to find ways to free itself, but the process has clearly started. For its part, Washington runs on money, and since its current antics will tend to make money grow scarce even faster than it otherwise would, those who stand to lose the most will make the Washingtonians feel their pain and will force a change of course.

As a result, everyone will be pushing in the same direction: toward a slow, steady, controllable imperial collapse. All we can hope for is that the rest of the world manages to come together and build at least the scaffolding of a functional imperial replacement in time to avoid collapsing into a new post-imperial dark age.


Source: Club Orlov

Orlov is one of our favorite essayists on Russia and all sorts of other things. He moved to the US as a child, and lives in the Boston area.

He is one of the better-known thinkers The New Yorker has dubbed 'The Dystopians' in an excellent 2009 profile, along with James Howard Kunstler, another regular contributor to RI (archive) . These theorists believe that modern society is headed for a jarring and painful crack-up.

He is best known for his 2011 book comparing Soviet and American collapse (he thinks America's will be worse). He is a prolific author on a wide array of subjects, and you can see his work by searching him on Amazon.

He has a large following on the web, and on Patreon, and we urge you to support him there , as Russia Insider does.

His current project is organizing the production of affordable house boats for living on. He lives on a boat himself.

If you haven't discovered his work yet, please take a look at his archive of articles on RI . They are a real treasure, full of invaluable insight into both the US and Russia and how they are related.

[Aug 30, 2018] There are tons of corrupted Party elites who've enriched themselves brazenly and shamelessly as their counterparts in iFUKUS. But you shouldn't simply equate the whole Chinese party elites to "MIC banksters and its minions" because of some fundamental differences

Aug 30, 2018 | www.moonofalabama.org

lulu , Aug 29, 2018 10:48:35 AM | 49

Oft@45

There are tons of corrupted Party elites who've enriched themselves brazenly and shamelessly as their counterparts in iFUKUS. But you shouldn't simply equate the whole Chinese party elites to "MIC & banksters and its minions" because of the following fundamental difference:

CPC kicked out all the Britons, Frenchs, Germans and Japanese who had hold the top and senior positions of China's Maritime Customs Service . Can you imagine the Inspector-General of US/US/France/Germany's Custom had been a Chinese for almost 100 years to serve China's interests?

(This is why Mao is so hated by US & Western ruling elites, and CPC has got so much smearing campaigns going on against it.)

"MIC & banksters and its minions" won't ever give up their pursuit of profits for the sake of national interests. The best example is their continuing of unjustified and useless wars for profits: Afghanistan (17-year), Iraq (14-year), Syria (7-year), Iran (in planning). The trillions of $$$ could be well spent for debt cancellations for the ordinary American people!

- CPC has set the " Targeted Poverty Alleviation " as its government short-term (2021) and mid-term (2049) goals, and requires all party cadres from village/county/province/central government to go the poorest areas in their respective regions with financial aids, training and economic incentives to help the poorest and weakest people to be able to live a decent lives on their in long term.

Their annual appraisal is linked with how the living standards of the poor people under their responsibility is improved. Anyone who wants to climb the career ladder to become a mayor, governor of a province or member of politburo (the final power center), he/she has to show the scorecard for his/her working.

I haven't heard any such initiatives taken by any "MIC & banksters and its minions" to help the poor in FUKUS. Maybe I am not enlightened on this topic? You are welcome to educate me.


- Contrary to Fed, the Central Bank (People's Bank of China) is controlled by the government not some private bankers. Don't believe the nonsense about NWO taking control of China.


- Bribery is crimes in China, not legalized as lobbying in iFUKUS . IF it were legalized as in the US, then the corruption number in China would be dramatically reduced.


As I said in our previous discussion on last Wednesday, of course, some of the party elites, rich Chinese and their minions (in media and academy) have been pushing very hard for 30+ years to completely adopt the "advanced US systems" to secure their gains and powers. Xi is trying to reverse the trends. (That's why you read/saw the uproars from MSM and online social media, both inside and outside China when the two-term limits were deleted from the constitution.)


There are still ongoing corruptions in China; CPC has made some big mistakes and is still tumbling here and there. But it is too simple to think the Party elites = "MIC & banksters and its minions," because they know as we know that people will throw them off when they behave like "MIC & banksters and its minions", who put their own interest above everything and everyone.


Every Chinese knows " Water can carry the boat but can also turn it upside down. "(水能载舟,亦能覆舟 - by Xun Zi, 313 BC -238 BC), a famous Chinese philosopher and educator). CPC elites probably know it much better than average citizen.

lulu , Aug 29, 2018 10:59:16 AM | 50
To understand how and why CPC thinks and acts the way it is, maybe you should know a little bit about the fundamental Chinese (ancient) governing philosophy and ethics.

China has been a secular country since Zhou Dynasty (1046 BC), the Emperor and Central Government did not need to rely on a religion body/head to justify his legitimacy as a ruler, rather it depended on the Mandate of Heaven :

The people are of supreme importance; the altars of the gods of earth and grain come next; last comes the ruler . That is why he who gains the confidence of the multitudinous people will be Emperor... When a feudal lord endangers the altars of the gods of earth and grain, he should be replaced. When the sacrificial animals are sleek, the offerings are clean and the sacrifices are observed at due times, and yet floods and droughts come [by the agency of heaven], then the altars should be replaced.

--  Mencius (372–289 BC or 385–303 or 302 BC)

Different to the Western's definition of legitimacy of government, which I think the Western put great emphasis on the process legitimacy , Chinese defines legitimacy via the final governing results . CPS' mandate is to improve the lives of Chinese and safeguard the sovereignty. This is where its legitimacy comes from.

If CPC elites behaves the way the MIC/Bankter & their minions do, it will be thrown off.

[Aug 25, 2018] In The New -Multipolar World- The Globalists Still Control All The Players - Zero Hedge

Notable quotes:
"... These wars, no matter what form they take, are a circus for the public. They are engineered to create controlled chaos and manageable fear. They are a means to influence us towards a particular end, and that end, in most cases, is more social and economic influence in the hands of a select few. In each instance, people are being convinced to believe that the world is being divided when it is actually being centralized. ..."
"... Globalists themselves are drawn together by an ideology. They have no common nation, they have no common political orientation, they have no common cultural background or religion, they herald from the East just as they herald from the West. They have no true loyalty to any mainstream cause or social movement. ..."
"... What do they have in common? They seem to exhibit many of the traits of high level narcissistic sociopaths, who make up a very small percentage of the human population. These people are predators, or to be more specific, they are parasites. They see themselves as naturally superior to others, but they often work together if there is the promise of mutual benefit. ..."
"... Contrary to popular belief in the liberty movement, Putin DID NOT kick out international banks or remove their power structures during his presidential rise. In fact, Rothschild banks still operate in Russia to this day, while Goldman Sachs and JP Morgan continue to act as the largest investment banks in the country. ..."
"... The globalist presence in Russia is perhaps why the nation developed such a close relationship with the IMF after the fall of the Soviet Union , why they continue their ties to the IMF an the Bank for International Settlements to this day and why the Kremlin has in the past called for a new global currency system controlled by the IMF. ..."
"... Trump has also had extensive dealings with the globalists, including Rothschild connected banking elites for the past 25 years. Wilber Ross , an investment banker working for the Rothschilds, was the primary agent that bailed Trump out of his considerable debts surrounding his Taj Mahal casino in Atlantic City. After Trump's rise to the White House, he made Wilber Ross commerce secretary and Ross now heavily promotes the developing trade war. ..."
"... Clearly, there is no "division" between the world's political leaders when it comes to who they are allied with. International banks and globalist think tanks are involved with ALL of them. But what about the rest of the world in general? Isn't the trade war causing division and decentralization among nations and economies? When you look at the very top of the pyramid, the divisions vanish. ..."
Aug 25, 2018 | www.zerohedge.com

Authored by Brandon Smith via Alt-Market.com,

The greatest tool at the disposal of globalists is the use of false paradigms to manipulate public perception and thus public action . The masses are led to believe that at the highest levels of geopolitical and financial power there is such a thing as "sides." This is utter nonsense when we examine the facts at hand.

We are told the-powers-that-be are divided by "Left" and "Right" politics, yet both sides actually support the same exact policy actions when it comes to the most important issues of the day and only seem to differ in terms of rhetoric, which is meaningless and cosmetic anyway. That is to say, it's nothing but Kabuki theater.

https://www.dianomi.com/smartads.epl?id=2381

We are told that corporate power must be balanced by government power and that government power must be balanced by "free markets," when in reality corporations are chartered and protected by governments and free markets simply don't exist in today's economy. In the case of social media "censorship," we are told that the solution is to use government power to enforce "fairness" instead of simply launching our own alternative platforms. Yet, social media corporations exist in the form of monopolies exactly because of government power and intervention in business. The abuses of one "side" are being used to push us into the arms of the other side, which is just as abusive.

In terms of geopolitics, we are told that national powers stand "at cross-purposes;" that they have different interests and different goals, which has led to things like "trade wars" and sometimes shooting wars. Yet, when we look at the people actually pulling the strings in most of these countries, we find the same names and institutions. Whether you are in America, Russia China, the EU, etc., globalist think tanks and international banks are everywhere, and the leaders in all of these countries call for MORE power for such institutions, not less.

These wars, no matter what form they take, are a circus for the public. They are engineered to create controlled chaos and manageable fear. They are a means to influence us towards a particular end, and that end, in most cases, is more social and economic influence in the hands of a select few. In each instance, people are being convinced to believe that the world is being divided when it is actually being centralized.

The key to any magic show is to get the audience to participate in the lie; to get them to focus on the distracting hand , to assume that what they are seeing is actually what is really happening - to suspend their skepticism.

Make no mistake, what we are seeing in geopolitics today is indeed a magic show. The false East/West paradigm is as powerful if not more powerful than the false Left/Right paradigm. For some reason, the human mind is more comfortable believing in the ideas of division and chaos, and it often turns its nose up indignantly at the notion of "conspiracy." But conspiracies and conspirators can be demonstrated as a fact of history. Organization among elitists is predictable.

Trending Articles 'Rich' Americans Have Never Been More Comfortable Relative

The last few months have seen a dramatic divergence between the 'comfort' of the haves and the have-notes.

Globalists themselves are drawn together by an ideology. They have no common nation, they have no common political orientation, they have no common cultural background or religion, they herald from the East just as they herald from the West. They have no true loyalty to any mainstream cause or social movement.

What do they have in common? They seem to exhibit many of the traits of high level narcissistic sociopaths, who make up a very small percentage of the human population. These people are predators, or to be more specific, they are parasites. They see themselves as naturally superior to others, but they often work together if there is the promise of mutual benefit.

The closest thing I can relate narcissistic sociopaths (and thus globalists) to in mythology would be vampires. I have often wondered if the concept of "vampires" was created as a way for the peasants of the dark ages to explain the soulless and monstrous behavior of the elites of their time. The notion that any person is capable of that kind if evil, let alone organized evil in the form of a cabal, is hard for people to accept to this day.

Vampires in mythology are usually depicted as elites, hiding in plain site as leaders of communities in the upper echelons of society. They seek out a village, insert themselves as upstanding patrons and aristocrats, then feed until that village is destroyed. Afterward, they move on to the next village. This is what they are. This is what they do, and they do it in organized fashion to make the process more efficient.

It takes a village to feed a vampire, or a narcissistic sociopath.

I relate this metaphor because I think it's important for the average person to understand what we are really dealing with here. When some people recoil at the notion of a syndicate at the highest levels of finance and politics working towards nefarious purposes, they should know that this is easily explained not only in terms of historic myths and archetypes, but in well documented psychological study.

Analysts and activists within the liberty movement have proven impressively immune to many of the narratives and lies of conspiratorial globalists, which is why they are now the main target of multiple propaganda campaigns. Globalists don't feel comfortable climbing into their coffins to sleep during the day while so many Van Helsings are lurking about exposing their activities.

The latest propaganda effort I have seen is the narrative of the "multipolar world" developing in the wake of what the IMF refers to as the "global economic reset." In fact, the term "multipolar world" is being used in alternative media circles a lot these days, and this is once again a ploy designed to con us into believing that centralization is no longer a threat and that the divisions we see are real rather than fabricated.

Under the multipolar narrative, we are told that the shift away from the U.S. dollar as the world reserve is now happening and that this is being led by Eastern political powers seeking alternatives. This is true, to a point.

The lies surrounding this development are many, though. We are told that Eastern political powers are at odds with globalists and globalism -- this is false. We are told that BRICS nations are seeking a decentralized system to replace dollar hegemony -- this is false. We are told that Eastern leaders like Putin and Xi are countering the globalist power grab and are being targeted by the elites as if they are "rebelling" against the empire -- this is also false. We are told that the trade war is a means for Donald Trump to disrupt globalization and throw a monkey wrench into the globalists plans -- this is fantasy.

Liberty activists and analysts are particularly susceptible to the idea because it plays on our desire to see the longstanding dollar-based empire of the Federal Reserve fall into the oblivion it deserves. The problem is that the narrative is based on the fraudulent assumption that the globalist empire is rooted in the "American empire."

Here are the facts :

Globalist influences are hyper-present in eastern nations. For example, Vladimir Putin, who is often depicted as some kind of anti-globalist hero in liberty movement discussions, is not anti-globalist at all. Putin was "discovered" by vocal new world order proponent Henry Kissinger decades ago in the early 1990s before he took on the role as acting president of Russia. Putin relates his first meeting with Kissinger and their longstanding friendship in the book First Person , his autobiographical account of his early career.

Contrary to popular belief in the liberty movement, Putin DID NOT kick out international banks or remove their power structures during his presidential rise. In fact, Rothschild banks still operate in Russia to this day, while Goldman Sachs and JP Morgan continue to act as the largest investment banks in the country.

The globalist presence in Russia is perhaps why the nation developed such a close relationship with the IMF after the fall of the Soviet Union , why they continue their ties to the IMF an the Bank for International Settlements to this day and why the Kremlin has in the past called for a new global currency system controlled by the IMF.

China has also called for the same new monetary system , not decentralized, but completely centralized under the IMF. China has been under the influence of the Rockefeller Foundation since around 1915, when they opened a university in the country based on the University of Chicago. China continues its ties to the globalists through the BIS and IMF, and Goldman Sachs is heavily involved in Chinese government activities and business arrangements. Only last year, Goldman established a $5 billion deal with an arm of the Chinese government to make it easier to purchase companies and assets within the United States. Donald Trump praised the deal as beneficial to the U.S., which is not surprising considering the number of Goldman Sachs alumni Trump has involved in his cabinet.

Trump has also had extensive dealings with the globalists, including Rothschild connected banking elites for the past 25 years. Wilber Ross , an investment banker working for the Rothschilds, was the primary agent that bailed Trump out of his considerable debts surrounding his Taj Mahal casino in Atlantic City. After Trump's rise to the White House, he made Wilber Ross commerce secretary and Ross now heavily promotes the developing trade war.

Clearly, there is no "division" between the world's political leaders when it comes to who they are allied with. International banks and globalist think tanks are involved with ALL of them. But what about the rest of the world in general? Isn't the trade war causing division and decentralization among nations and economies? When you look at the very top of the pyramid, the divisions vanish.

Consider Russia's ongoing oil pipeline deal with Germany , or Russia's latest deal to allow China to farm over 2.5 million acres of Russian land , helping directly combat U.S. sanctions. Or what about the Caspian Sea deal between Russia, Iran and multiple other countries to end the dispute over the region? And how about China's defiance of sanctions on Iranian oil ? Or the EU's growing protests over US interference in their oil trade with both Iran and Russia?

These are just some of the latest examples of the rest of the world melding into a larger conglomerate in the wake of the trade war. The trade war is bringing all these supposedly disparate countries together in a way that is rather convenient for globalists. If we take into account the reality of globalist influence in all major economies, then we have to also take into account the possibility that the "global economic reset" is not about a "multipolar world," but an even more centralized unipolar world. A world which sacrifices the U.S. model along with the dollar as world reserve and replaces it with something EVEN WORSE.

In the meantime, liberty activists are lately being told that they should rally around the death of dollar and the global reset as if it is the end of globalism. In other words, we are supposed to stupidly believe that the shift to the new world order is "decentralization" simply because they call it "multipolar." Just because the U.S. is no longer the face of the beast does not mean the beast is gone.

* * *

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[Aug 23, 2018] The crisis of the US empire and the crisis of neolibral globalization

There are two main sign of th current crisis of neoliberalism: (1) delitimization of the ruling neoliberal elite; (2) crash of the US led global neoliberal empire due to internal contradictions between states which compose it (including paradoxically the imperial center -- the USA)
In addition the costs of maintaining the American empire became way too big. Here's what TOM ENGELHARDT wrote about Afghanistan in 2009, while considering the metrics of "a war gone to hell": "While Americans argue feverishly and angrily over what kind of money, if any, to put into health care, or decaying infrastructure, or other key places of need, until recently just about no one in the mainstream raised a peep about the fact that, for nearly eight years (not to say much of the last three decades), we've been pouring billions of dollars, American military know-how, and American lives into a black hole in Afghanistan that is, at least in significant part, of our own creation."
Notable quotes:
"... Yet in our time, the condition of liberal centrism, in the U.S. and in the West more broadly, has been weakened. The big reason, Siegel argues, is that the last quarter century has "been an era in which national and global economies were remade in ways that have allowed wealthy capital owners to capture the large majority of economic productivity gains, creating in-country inequalities not seen since the late 19th century." ..."
"... Still, as recent election results -- from Donald Trump 2016 shock to Alexandria Ocasio-Cortez's more recent victory -- show us, the political toll on the status quo is evident: the Vital [Neoliberal] Center has been de-vitalized. ..."
"... the argument was made that U.S. military interventions, most notably in Iraq, were inevitably stirring up the forces of backlash. ..."
"... Turning to the West, the question on the table is this: should today's backlash against centrist [neo]liberalism -- including the revolt against such isms as globalism and neoliberalism -- be seen in such stark terms? Are the socioeconomic forces that have been unleashed in our midst today in any way comparable to the counter-enlightenments of Mittel ..."
"... For his part, Siegel seems pessimistic. He laments that "a hard-won American ethos of tolerance and respect for the individual [has] devolved into a progressive-plutocrat alliance that characterizes the worst of the neoliberal dispensation, and is loathed by much of the country. It produces a backlash." ..."
"... For instance, in Europe, there's the gathering political rebellion against the dictates of the European Union, most notably on immigration. That rebellion, we might note, has extended beyond the Visegrád countries; it now includes Austria, Italy, and Malta . ..."
Aug 22, 2018 | www.theamericanconservative.com

Originally from: Are We in the Midst of Another Counter-Enlightenment- - The American Conservative By JAMES P. PINKERTON

As socialists and nationalists gain strength, the question of whether the [neoliberal] center can hold is once again being asked. August 22, 2018

Can what remains of the status quo survive? Does it deserve to? These are always pertinent questions, of course, and recently the brooding dynamics of change were posed in a thoughtful way by Jacob Siegel , writing in Tablet.

In his piece, "The Dirtbag Convergence," Siegel argues, "Behind the convulsions and confusion of the Western political landscape there is an unspoken alliance between two seemingly hostile camps. Populists and anti-humanists have entered into an ad hoc coalition in their fight against the liberal establishment."

Of course, the "alliance" is more of what political scientists call an "objective alliance," that is, two sides that hate each other nonetheless find themselves working against a common enemy -- which they hate even more.

As Siegel notes, in 2017, an alt-right blog , The Daily Stormer, accused an alt-left podcast, Chapo Trap House, of ripping off its material. The two antithetical portals, Siegel explains, actually shared much in common, even beyond their splenetic hostility to Hillary Clinton and other establishmentarians. That is, they shared a style, which Siegel described as "antic cleverness and vitriol with a bleaker undercurrent." Thus "the far left and far right converge around an axial opposition to hegemonic [neo]liberalism."

Siegel's argument summons to mind a famous 1948 op-ed by Arthur M. Schlesinger, Jr., "The Vital Center." Taking aim at both fascists and communists, Schlesinger wrote, "Right and Left should be conceived, not in terms of a line, but in terms of a circle." Indeed, he added, "the main target of both totalitarian extremes must be the Center -- the group which holds society together." Schlesinger ended with a hopeful conclusion: the path forward was a "democratic middle way, which unites hopes of freedom and of economic abundance."

We might observe that back in the '40s, Schlesinger was fully confident that his brand of New Deal/Fair Deal liberalism was up to the task of upholding the Vital Center against all comers. (The following year, he enlarged his article into a book.) And indeed, the strong economy of that era, broadly shared among the classes, energized small-d democrats in both parties.

Yet in our time, the condition of liberal centrism, in the U.S. and in the West more broadly, has been weakened. The big reason, Siegel argues, is that the last quarter century has "been an era in which national and global economies were remade in ways that have allowed wealthy capital owners to capture the large majority of economic productivity gains, creating in-country inequalities not seen since the late 19th century."

To be sure, such declarations are hotly disputed in many quarters. Yes, it's true that inequality has risen, and yes, it's also true that many areas have been de-industrialized, depopulated, and demoralized. Yet at the same time, the standard of living for all has vastly improved. Mere statistics don't begin to capture the value of -- to name just three examples -- the polio vaccine, air conditioning, and GPS.

Has Liberalism Failed? We Should Hope Not Classical Illiberals

Still, as recent election results -- from Donald Trump 2016 shock to Alexandria Ocasio-Cortez's more recent victory -- show us, the political toll on the status quo is evident: the Vital [Neoliberal] Center has been de-vitalized. And here Siegel is helpful -- maybe even a bit gleeful -- in laying the blame at the feet of the once-vital [neoliberal] establishmentarians. As he puts it, a "hyperliberal, oppositional politics of the New Left has captured much of the Western ruling class," thereby vitiating its ability to do good. Such a ruling class, we might add, seems less interested in Schlesingerian "freedom and economic abundance" for all, and more interested in punitive political correctness and green-inspired austerity -- at least for the dreaded working class.

Moreover, this curdled leftism has a mirror on the right. That is, the black-identity politics championed by, say, Ta-Nehesi Coates finds its doppelgänger in the "identitarian" movement. (And if you haven't heard anywhere near as much about right-identity politics as left-identity politics, well, that could change.)

As a result of its own self-negation, the [neo]liberal establishment, Siegel says, "is uniquely unprepared to defend itself at a moment of massive transformation of the basic material conditions on which [neo]liberalism is based."

So where does all this lead? Interestingly, Siegel makes brief mention of Isaiah Berlin, the 20th-century Oxford don who wrote much about an earlier backlash against liberalism, what became known as the Counter-Enlightenment.

If we can decamp back a couple of centuries, we will remember that the Enlightenment of the 18th century gave us such towering Age of Reason figures as Thomas Jefferson, Adam Smith, and Voltaire. Yet in life, as in physics, every action has an opposite reaction, and so it was with the Enlightenment. And if the Counter-Enlightenment of the 19th century is less well known, that's in part because it's often known by other names, such as romanticism or, more broadly, nationalism. These are heavy terms, bearing much historical weight: our reckoning of nationalism, of course, is hopelessly tangled up with memories of the world wars of the 20th century.

So now, from the perspective of the 21st century, we have to wonder whether rough beasts have been loosed. And as it happens, years ago, this author also wrote about Isaiah Berlin and the Counter-Enlightenment, albeit in a different context -- the Middle East. In the Jerusalem Post in 2003 and in the Huffington Post in 2006, the argument was made that U.S. military interventions, most notably in Iraq, were inevitably stirring up the forces of backlash. That is, instead of promoting democracy, as the Bush 43 administration had hoped to do, the U.S. was instead summoning nationalist and religious demons. Not long thereafter, the rise of ISIS and anti-democratic fervor in countries such as Turkey vindicated that foreboding. (Alas, both articles seem to have been lost in their original form; here's a new link to the text of both.)

Turning to the West, the question on the table is this: should today's backlash against centrist [neo]liberalism -- including the revolt against such isms as globalism and neoliberalism -- be seen in such stark terms? Are the socioeconomic forces that have been unleashed in our midst today in any way comparable to the counter-enlightenments of Mittel Europe or the Middle East?

Alas, Isaiah Berlin is no longer around to help render a judgment; he died in 1997.

For his part, Siegel seems pessimistic. He laments that "a hard-won American ethos of tolerance and respect for the individual [has] devolved into a progressive-plutocrat alliance that characterizes the worst of the neoliberal dispensation, and is loathed by much of the country. It produces a backlash."

Some would say that the backlash is already here. In the U.S., we've had plenty of rumblings, and yet the D.C.-based conventional wisdom still insists that the center will hold, that the Democrats will stymie Trumpian Republicans in the upcoming midterm elections, even as they simultaneously put a lid on Ocasio-Cortezian leftists. Are the Democrats -- joined, of course, by the mainstream media and other allies -- really strong enough to do all that? We'll know soon enough.

In the meantime, whatever one thinks of populist insurgents on the right and left -- and whether they are seen as paradigm shifters or just hiccups -- there are other phenomena around the world to be considered.

For instance, in Europe, there's the gathering political rebellion against the dictates of the European Union, most notably on immigration. That rebellion, we might note, has extended beyond the Visegrád countries; it now includes Austria, Italy, and Malta .

So can the center hold? That exact question was asked back in 1919 by the poet William Butler Yeats. In "The Second Coming," Yeats offered his dire answer, and he was soon enough vindicated, calamitously and tragically.

A century later, the centrists of today will have to see whether they can do better -- if, that is, they are able to see at all.

James P. Pinkerton is an author and contributing editor at TAC. He served as a White House policy aide to both Presidents Ronald Reagan and George H.W. Bush.

[Aug 19, 2018] Will Iran war be a final nail in the US neoliberal empire?

Aug 19, 2018 | www.unz.com

Anon [425] Disclaimer , August 17, 2018 at 5:38 am GMT

Yeah, but Trump's tweets are bluster like calling Assad an 'animal'.

It's red meat to the morons, and it is one thing that MSM won't be too harsh on him for because MSM is run by Zionists.

Haxo Angmark , Website August 17, 2018 at 5:52 am GMT
yes, ZOG will attack Iran on behalf

of Israhell and the petrdollar.

only question is, how bloody

the false flag

which (((they))) use to trigger the war.

Many of us continue to wonder

what was in that container offloaded from a Zionist aircraft during the Atlanta airport shut-down.

I hope we don't find out.

Quartermaster , August 17, 2018 at 12:14 pm GMT

In fact, all the western demands towards Russia (admitting that Russia is guilty for the Skripal case, that Russia shot down MH-17, that Russia hand over Crimea to the Ukronazis, etc.) are carefully crafted to make absolutely sure that Russia will not negotiate.

The US doesn't have to do anything to make negotiations impossible with Putin (and it is Putin you have to deal with as he's the head of the Kleptocracy masquerading as a country). Putin is too stupid to see what he's doing to his country, or he knows (more likely) and doesn't care.

Like it or not, the evidence is incontrovertible that MH-17 was shot down by a Russian AD unit. Even the fascists Putin inserted into the Donbas have admitted as much on video.

The Skripal case is a wonder. It is known that a nerve agent was used against the man and his daughter. The Swiss lab that tested their blood said the murder attempt was done with an agent that was used in the west. The only serious question is where it would have come from as both the US and the UK destroyed their chemical weapons years ago. The only people with motive and opportunity is Putin's regime. The murder would not have been first for Putin's regime either.

Putin is an invader in both the Donbas and Crimea. Sooner or later, Russia will disgorge both. Both are a very large drain on the Russian treasury and are not affordable.

see their words about the US being "non-agreement capable"

Russia has long proven it is impossible to make an agreement with them and realistically expect them to live by it. It has been so since the Bolshevik Revolution, and once again since the mafia state put Putin at its head. Putin's behavior invading Ukraine shows he can't be trusted as Russia is one of the signatories of the Budapest memorandum guaranteeing the territorial integrity of Ukraine. This after Putin's regime stated that Crimea is Ukraine's. The man is simply a jumped up criminal that Saker loves.

I have been predicting such an attack since 2007 and, so far, I have been completely wrong (and thank God for that!).

We can be thankful that Saker has a good record about being wrong. OTOH, the US has no desire to attack Iran. Why should the US? Iran is in the process, just like Russia, of rotting from within.

bluedog , August 17, 2018 at 12:48 pm GMT
@Quartermaster

What a load of bullshit as we weave our tangled web,but then again that's what trolls do,for everything you claim Russia's doing is exactly what we the U.S. are doing,or as the man said "we are incapable of making any agreement and sticking to it" .

Renoman , August 17, 2018 at 1:10 pm GMT
What a huge steaming pile that was QM, you must ave been constipated a long time.
Anon [344] Disclaimer , August 17, 2018 at 4:34 pm GMT
Iran will probably get the former and not the latter. Trump screwed up in abrogating that Iran deal. Now, the deep state will have no choice but to force him to annihilate Iran, either through shock and awe or clandestine regime change. Trump was warned, but he foolishly didn't listen. Shame that we're doing Israel's foreign policy instead of our own. He may even end up bringing himself down in Saudi Arabia and Israel's war.

Where are all the competent American leaders? What happened to them?

Si1ver1ock , August 17, 2018 at 5:04 pm GMT
An interesting column as usual. What I find intriguing is that it's the United States that seems desperate. It's the United States that seems to be going through a nervous breaking down, crisis of confidence, whatever you want to call it.

Maybe Chinese, Iranians and Russians are right. All they really have to do is make their countries better while the US destroys itself, flailing around trying to keep its empire together.

I wonder is Assad is thinking about renting the Turkish army to get back Syria's stolen territories. Turkey was stealing oil from Syria via ISIS which the Russians stopped by bombing ISIS. Assad could offer Erdogan part of the oil profits from a united Syria for X number of years to pay for helping unite Syria.

It would allow Erdogan a way to monetize his investment in the Turkish military.

This part:

"Every ten years or so, the United States needs to pick up some small crappy little country and throw it against the wall, just to show the world we mean business".

Venezuela is supposed to start using the Petro soon. Pompeo has been running around Latin America trying to organize the Brute Squad.

ThreeCranes , August 17, 2018 at 5:32 pm GMT
@Si1ver1ock

"All they really have to do is make their countries better while the US destroys itself, flailing around trying to keep its empire together."

This seems right. Given immigration trends, the US will find itself without not just an Empire but a country as well.

eyesfrontmen , August 17, 2018 at 7:06 pm GMT
PMAFT remarked that all religions plus atheism had been infested by feminism. He also discussed the deep penetration of feminism into Islam, with particular reference to Iran.
This bears on the current conundrum of Iran.
It is self evidently true that any country possessing sufficient resources to feed itself and sustain an industrial economy can enjoy reasonable prosperity without much foreign trade. It needs only a sufficient population of people smart enough, educated enough, and willing to work hard.
Iran has all of that.
It is also a self evident fact that intact family based society is the breeding ground of both prosperity and harmonious society.
It is also a self evident fact that an organically growing population is the only true engine of sustained economic vitality.
The real problem Iran has right now is that its women are not home, producing and raising children.
If they were, there would be more than enough jobs for all the men, and the internal demand for goods and services which could be primarily produced from internal resources and trade from those still willing to trade with it.
War for Blair Mountain , August 17, 2018 at 7:20 pm GMT
Well nuking Japan with two nukes did in fact shorten the war. The decision to nuke Japan was based upon what was understood at the time about the war with Japan. It is wrong to view the nuking of Japan from a revisionist perspective.

Just go look at the photos from Life Magazine in 1945 photos of mothers kneeling in churches wearing prayer veils and clutching rosary beads praying for their teenage sons to come home alive. The war had to be brought to an end as soon as possible by any means necessary.

If the nuking of Japan saved the lives of only 10 American Soldiers who otherwise would have died if two nukes had not been dropped on Japan .it was worth it.

When actor Eddie Albert filmed the bloated bodies of American Teenagers floating off the beaches of Iwoa Jima and Guadalcanal .it was a 100 percent foregone conclusion that Japan was gonna be nuked Millions of American Mothers viewed Eddie Albert's film footage in theaters across America in 1945.

War for Blair Mountain , August 17, 2018 at 7:46 pm GMT
@War for Blair Mountain

More specifically those were the bloated bodies of NATIVE BORN WHITE CHRISTIAN AMERICAN TEENAGERS floating lifeless off the beaches of Iwoa Jima and Guadalcanal .and don't forget the Sullivan Brothers ..this is why two nukes were dropped on Japan.

I am massively opposed to bombing Shia Muslim Iran .I generally have a "WAR IS A RACKET!!! General Smedley Butler View of the US Military .having said that, I am for the mass deportation of every Iranian off of Native Born White American LIVING AND BREEDING SPACE .along with every Israeli National such as Michael Chertoff

The Cleaner , August 17, 2018 at 8:57 pm GMT
War with Iran? Within a week Saudi Arabia would be a smoldering cinder, the whole infrastructure around Ghawar oil field in flames. The Saudi sultans would lose power never to get it back again. There is a large Shi'ite population in Saudi Arabia and there is a good chance that the country, once the royal family was booted, would change sides.

Meanwhile, any American ships in the Perisn Gulf would be scrap.

My opinion is that every time the knuckleheads get together in the same room to gin up the illusion that they can go to war with Iran they look into one another's eyes and realize that they are a bunch of total assholes. Somehow, somewhere, there is a glimmer of non-stupidity, though don't ask me where.

Philip Owen , August 17, 2018 at 11:45 pm GMT
White man speak with forked tongue.
SolontoCroesus , August 18, 2018 at 12:33 am GMT
@The Cleaner

The Cleaner wrote:

"Somehow, somewhere, there is a glimmer of non-stupidity"

"Don't fire 'til you see the glimmer of non-stupidity ."

"Give me the glimmer of non-stupidity or give me death."

"Mine eyes have seen the glory of the glimmer of non-stupidity ."

"O -oh say can you see
The glimmer of non-stupidity?"

My country tis of thee,
Sweet land of liberty,
Of thee I sing.
Look in each other's eyes
And realize
The glimmer of the prize:
Non-stupidity!

Wally , August 18, 2018 at 2:47 am GMT
@Anon

said:
"Where are all the competent American leaders? What happened to them?"

They sold out to the fake '6,000,000 Jews' propaganda, which, BTW, Jews have been slinging since at least 1823.

That is what causes so many "American leaders" knees to buckle.

That is what allows Jews & "that shitty little country" to get away with their hateful, violent ways.

http://www.codoh.com

Colin Wright , Website August 18, 2018 at 5:40 am GMT
@The Cleaner

' My opinion is that every time the knuckleheads get together in the same room to gin up the illusion that they can go to war with Iran they look into one another's eyes and realize that they are a bunch of total assholes. Somehow, somewhere, there is a glimmer of non-stupidity, though don't ask me where.'

That would be my hope . I lack the confidence in it to label it my opinion.

The troubling bit is that for the purposes of the neo-cons and Zionists, it's not necessary that the United States win its war with Iran -- just that it starts it. As to Saudi Arabia being wrecked -- explain to me how that harms Israel.

peterAUS , August 18, 2018 at 6:43 am GMT
First, as always, a bit of dopamine fix for the Team Russia and USA haters in general:

Ukronazi .. the leaders of the Empire have apparently have given up on their plans to launch a Reconquista . their hysterical rhetoric .. the failed US cruise missile strike .. for all its hysterical barking the Empire has to back down when the opponent does not cower away in fear .. the kindergarten-level low-IQ bumbling hot air and threats coming out of the White House . in his typical ignorance, Trump fails to realize some stupid kid the level of hubris, arrogance and stupidity of the US leadership . US could be dismissed as a particularly obnoxious country led by ignorant leaders with bloated and mostly ineffective armed forces .. a megalomaniac infused with a sense of messianic superiority . their messianism is in no way less delusional than the one of their Nazi predecessors (or, for that matter, the one of the Popes of the past 1000 years),

and a couple more
The above also creates an atmosphere for .. healthy ..discussion. More online therapy and, all in all, a positive contribution to well being of a certain minuscule substrata of Internet presence.
Commendable.

A bit of reality check, finally (pun intended) at last:

Finally, history is full of examples of wars which were started in spite of all objective factors indicating that they would end up in disaster.

A disaster being much, much bigger for the regime in Tehran than for the US administration. That's all what matters.

And:

The truth is that in terms of aggregate national power, the US still remains the most powerful country on the planet (even if we don't include nuclear weapons).

to me it very much looks like an attack is pretty much inevitable.

A bit of cold shower after main session. Back to real world. Till next week.
Nice.

A smooth operator.

Erebus , August 18, 2018 at 10:03 am GMT
@eyesfrontmen

It is also a self evident fact that an organically growing population is the only true engine of sustained economic vitality.

It certainly doesn't seem to been self-evident to economists, though they're apparently getting it now. The incredible step-function in the historical growth curve over the last century can largely be accounted for by the fact that the earth's population grew 3.6x. That was in turn fuelled by the discovery and harnessing of the chemical energy in hydrocarbons.

It is also a self evident fact that intact family based society is the breeding ground of both prosperity and harmonious society.

Up to a point, and we reached it some time ago. The discovery of hydrocarbon energy had a price we ignored because it seemed we'd never have to pay it.
Then the bills started coming in.
Beyond a certain point, prosperity breeds not children, but decadence (in its widest sense), and eventually dystopia.
Hydro-carbon energy accelerated resource extraction at such a rate as to run the planet dry in a century. All the low-hanging fruit, whether it's more hydrocarbons, or the minerals and crops that we require in ever increasing amounts is at, or beyond peak extraction. We're now digging up ores our fathers viewed as not worth the trouble, and our grandfathers scarcely recognized as ores. Industrialized agriculture depends on hydrocarbon based fertilizers juicing up half-dead topsoils to grow flavourless, nutrient-free crops.

We stopped breeding at roughly the same time we lost confidence, however subliminally, in our and the planet's ability to give future generations a shot at the same brass ring our great-grandfathers grabbed. Somehow, something deep down in our brain stems told us it was a one-shot deal, and we'd taken it. The opportunity will never come 'round again, and it's all downhill from here.

How that ties in to Iran is that the last great expanse of land and resources is the Eurasian continent. China and Russia want to integrate it into an economic block that can extend modern civilization for its population a little longer. Iran is critical to it as it sits at the geographical and geopolitical fulcrum of the continent. A glance at a map of the ancient silk roads shows them converging at Tehran and branching out from there as they traverse the continent. Today's BRI likewise envisages Iran in its ancient role as the focal point of trade and transport between East and West. Then as now, the continent needs Tehran.

The Imperial Imperative facing the Emperor today is that Eurasian integration must be stopped, or at least prevented from achieving its full potential. Attacking Russia or China guarantees destruction of the Empire itself, but Iran remains Eurasia's most vulnerable important node.

That's why every POTUS since Bush the First has found himself echoing Cato the Elder's famous meme: "Tehran delenda est!". Cato died before Carthage laid waste. So will Bush the Elder and all his successors.

Rome was on the rise, and went on to greatness with the destruction of Carthage called for by Cato. America is entering its dotage and Trump, should he act on the call will achieve the opposite.

Dave from Oz , August 18, 2018 at 10:36 am GMT
@Quartermaster

Putin is an invader in both the Donbas and Crimea. Sooner or later, Russia will disgorge both.

Far from being an "invader", Russia has owned Sevastapol on the Crimean Penninsula since the Tsars who built it in the first place. "The Ukraine"? How can you invade a place that has only existed for 50 years, on territory that was annexed from your own country?

Russia will never willingly surrender Sevastopol . Never. A simple look at google maps will explain why. It is a major military asset, it is their sea-lane to the Mediterranean and the Suez Canal. Their other ports are on the Baltic Sea, the Arctic Ocean, and way to the east on the Pacific.

No geopolitics makes any sense at all until you look at a map.

The Swiss lab that tested their blood said the murder attempt was done with an agent that was used in the west. The only serious question is where it would have come from as both the US and the UK destroyed their chemical weapons years ago.

HAHAHAHAHAHAHA! Are you serious? Really? You can't possibly be!

Dave from Oz , August 18, 2018 at 10:45 am GMT
The Ayatollah didn't mention the #1 reason that negotiating with the USA is pointless: the USA does not keep to its agreements. Ask the Blackfoot Indians. Ask the Canadian softwood industry. For that matter – ask the Japanese-Americans herded into concentration camps during WWII.
Tulips , August 18, 2018 at 1:12 pm GMT
The US has always been ready and comfortable to violate its treaties, despite the US Constitution declaring that treaties are the supreme law of the land. Our first treaty, signed with France, was violated. Canada and the US have 2 free trade treaties (FTA, NAFTA), but the US always puts tariffs on lumber, never mind that the treaties' trade tribunal rule against the US . The UN Charter was written by the US and passed into law as a treaty. There it says that the US agrees it is a crime to attack or threaten to attack a fellow UN member. No one ever notices that "all options on the table" threats are treaty violations and thus domestic crimes under our Constitution. Has there ever been a post-war President who did not violate the UN treaty?
FB , August 18, 2018 at 1:19 pm GMT
@Quartermaster

' Like it or not, the evidence is incontrovertible that MH-17 was shot down by a Russian AD unit '

So how about showing us this 'incontrovertible' evidence, Fartermaster ? LOL

FB , August 18, 2018 at 1:22 pm GMT
@Dave from Oz

Yes I see you have discovered the entertainment value of 'Fartermaster' and his delusions it is always useful to know that many mentally retarded adults are still not yet institutionalized

FB , August 18, 2018 at 1:55 pm GMT
As usual, this author's meandering narrative fails to leave any kind of impression what is he arguing anyway ? it is impossible to tell

Frankly the 'analysis' of Khamenei's statement that there will be no war is completely retarded why would Khamenei say anything other than what he meant ? Is that what the supreme leader of a considerable country as well as spiritual leader to many around the world does play word games and toss out cryptic riddles ?

I don't think so

Khamenei is saying there will be no war simply because there won't be Iran is not Afghanistan or Iraq or Serbia or Grenada

The US military has shown itself to be a paper tiger in all its recent conflicts the men in charge of the military understand this attacking Iran would be like trying to crack a walnut with your teeth the teeth will break long before the walnut

The war threat is pure bluff and Khamenei knows this [as do many observers] the economic pressure is the only tool that the US has left and that may work to inflict some pain on the Iranian people in the short term, but the world economy is no longer dominated by the West the Brics now account for 40 percent of the global economy there are options, to paraphrase Erdogan

So even the economic card is not what it used to be in fact it is getting weaker by the day the entire Western Ponzi economy is teetering like a house of cards and the economic warfare that the US is unleashing on half the world could in fact blow up in their faces

The 'there will be no war' part is not what is even interesting in all this it is simply a no-brainer

What is interesting is the fact that Iran is rejecting negotiations this was in fact the point of the bluff to begin with the Iran nuclear deal is a political hobby horse for Trump who wants to look like a big man who is keeping his word and undoing the Obama 'legacy' it's obvious now that the game plan was always simply to redo the Iran deal [probably in some cosmetic way] so that Trump gets the political points

But the Iranians aren't going to play that game and Trump is now shown to have miscalculated badly let's remember here that the US is now in violation of the Security Council resolution on the JCPOA it is in breach of the supreme international law

Iran can simply sit back and let the rogue nation be a rogue nation until it no longer can

Bliss , August 18, 2018 at 10:59 pm GMT
@War for Blair Mountain

If the nuking of Japan saved the lives of only 10 American Soldiers who otherwise would have died if two nukes had not been dropped on Japan .it was worth it.

So you calculate that the lives of 10 white soldiers is worth more than the lives of hundreds of thousands of non-white civilians (mostly women and children) from the opposing side in a war?

ohmy , August 18, 2018 at 11:29 pm GMT
@Haxo Angmark

Haxo, congratulations. I read international news daily, and from many and varied sources. Your remark; "what was in that container offloaded from a Zionist aircraft during the Atlanta airport shut-down.", is the first comment, since that day when the inbound Israeli plane tripped the rad measuring equipment at Atlanta International. I too want to know what was in the container. My guess it was ferrying to the ME one or all of the nukes detonated since that day. You know the ones I'm talking about, Ankara, Yemen, Damascas, and/or China.

ohmy , August 18, 2018 at 11:33 pm GMT
@Quartermaster

Are you f'n brain dead, or just a troll? The UK and US have not destroyed their chemical weapons, but oddly Russia has.

Sergey Krieger , August 18, 2018 at 11:38 pm GMT
@peterAUS

Team Russia vs team USA. You seem to always fight shadows. Also, I find it hilarious your American tendency to bring sport terms to things that can turn very deadly. Seems like a lack of healthy historical experience related to interstate violence with you are being on receiving end. Also, please state any reason why usa should not be hated? USA national character is that of a psycho. Who like psychos?

Sergey Krieger , August 18, 2018 at 11:48 pm GMT
@Erebus

You seem to follow Olduvai theory predictions. Basically the earth being a limited system this outcome is inevitable. The only way to avoid it is through space resources exploration which is impossible with economy and technologies based on hydro carbons and requires energy revolution and then technological breakthrough in space and other technologies. However, thanks to USA policies and world mess we are wasting time, human resources and natural resources to fight each other and waste everything to produce means of mutual annihilation. There was ussr socialism which was aimed towards stars but it was killed. I see little optimism for our future. If things are not done in timely manner that there will be no resources to proceed.

War for Blair Mountain , August 19, 2018 at 3:43 am GMT
@Bliss

Yes .

Erebus , August 19, 2018 at 4:40 am GMT
@Sergey Krieger

You seem to follow Olduvai theory predictions.

I had to look it up, but no, I don't think we're headed back to the stone age except perhaps in some distant future.

What I do think is that, barring some extraordinary "extinction event", the right side of the bell curve will tend to look similar to the left.
Over the next ~100 yrs or so we'll retrace our steps back to ~100yrs ago – a population of 2-3B and resource consumption on the scale of the 1920s. There may an overshoot, of course, before population and economic activity recovers and stabilizes from what will be a socio-political shock an order of magnitude greater even than the plagues that decimated Europe.

That makes for a couple of long tough centuries ahead, but the first decade or two are likely to be the most dramatic.

AnonFromTN , August 19, 2018 at 4:46 am GMT
The key strategic weakness of the neocon-run US is that it requires unquestioning obedience from its vassals. As only a hopeless nonentity can be unquestioningly obedient, the US brings to power total shit. However, shit is always cowardly. Ukraine is a good example: there was no offensive in Donbass not because of the kindness of heart of the "president" Poroshenko or others in power now in Kiev. There was no offensive because all this scum are, first and foremost, cowards. One might say that their cowardice is the only redeeming quality of current Ukrainian "rulers" (they don't rule, puppet masters rule them; hence quotation marks).

Thus, the US always fails to use vassals as a battering ram, and has to resort to its own military force. Despite strong negative selection, the US military commanders do have an idea what combat really is. That is why they do their best to avoid it. Under orders of the US politicians several US aircraft carriers sailed in general direction of North Korea. They lost two planes in the process, and sailed right back: nobody was willing to stick his neck out, as they knew that Un's noose is ready. Khamenei is right: the repeat of this farce, possibly with a loss of a few more planes, is all the US bluster will produce: Iranians also have their noose and, just like Un, won't hesitate to use it. Hence "no war".

"No negotiations" is even simpler: look what the US did with the negotiated agreement with Iran, which Iran was adhering to. This makes it clear to anyone with a brain that agreements with the US are worthless.

AnonFromTN , August 19, 2018 at 4:50 am GMT
@Quartermaster

the US and the UK destroyed their chemical weapons years ago

Trolls should be taught at least the most basic facts. The US never destroyed its chemical weapons, citing lack of funding. In contrast, Russia destroyed them all in full view of international observers.

Ilyana_Rozumova , August 19, 2018 at 5:54 am GMT
Lets not be children here. If somebody thinks that when Iranians went to into Syria to help the legitimate Syrian government, did not realize consequences must have a really small mind.
US has no proxy state in Levant anymore, except Saudi Arabia. And if expeditionary US forces will start to land in Saudi Arabia, Iranians will torch all Saudi Arabia to cinder. Much much worse than those California forest fires. Trust me please on this one Iranians are very eager to do it. All they only wait for an excuse.
Jeff Stryker , August 19, 2018 at 6:11 am GMT
@The Cleaner

"Non-stupidity"

Look at the 90′s and look at the United States AFTER Bush left office. Gasoline was 4 x higher 5 years after Iraq then it had been before.

When stupid hicks elect a moron like Bush they end up in a war that visits its worst after-effects on THEM. It is not the Leftist Jews on the East Coast hit the hardest by the post-War Recession or their kids getting short-changed by the VA.

The US cannot afford another war in the middle east and only a dumb moron from the sticks of Podunk regions who has never been overseas would actually think that the US economy would not finally sink into absolute ruins.

Afghanistan is a shithole after 17 years into which billions have been pissed long after the threat was gone.

A war with Iran, a country much wealthier and more powerful than some toilet bowl in the Hindu Kush, would bankrupt the US. Iran has far less to lose.

But with China doing business with Iran (And ultimately with Iraq and Pakistan) the Iranians don't want to go to war anyhow.

None of them are going to parachute into Iowa and invade the US. They can bottleneck the Persian Gulf for maybe a week before the US navy wiped them out. Otherwise, they pose no threat.

The morons are the ones who vote for a George Bush in an attempt to turn the clock back to the 1950′s when white Americans ran the world after World War II and were an uncontested Superpower.

It will never happen again, much as I would like it too. Jews began to organize draft-resistance and males will no longer go to war when "their country calls them". You cannot get a country to surrender with drone strikes-Afghanistan proved that.

Hick morons from the sticks might believe anything, but too much of the US public just doesn't give a shit about their values and is far too cynical to be convinced that a war with Iraq would be anything more than a disaster.

Wally , August 19, 2018 at 6:20 am GMT
@War for Blair Mountain

The two bombs were dropped on civilian, not military targets, a massive war crime per international law which the US signed onto.

said: "Well nuking Japan with two nukes did in fact shorten the war."

No, it did not.

It was the Soviet Union that got Japan to surrender, not US bombs.

Here is how General Dwight D. Eisenhower reacted when he was told by Secretary of War Henry L. Stimson that the atomic bomb would be used:
"During his recitation of the relevant facts, I had been conscious of a feeling of depression and so I voiced to him my grave misgivings, first on the basis of my belief that Japan was already defeated and that dropping the bomb was completely unnecessary, and secondly because I thought that our country should avoid shocking world opinion by the use of a weapon whose employment was, I thought, no longer mandatory as a measure to save American lives."

General Curtis LeMay, the tough cigar-smoking Army Air Force "hawk," was also dismayed. Shortly after the bombings he stated publically: "The war would have been over in two weeks. . . . The atomic bomb had nothing to do with the end of the war at all."

Fleet Admiral Chester W. Nimitz, Commander in Chief of the Pacific Fleet, went public with this statement: "The Japanese had, in fact, already sued for peace. . . . The atomic bomb played no decisive part, from a purely military standpoint, in the defeat of Japan."
Combined U.S.-U.K. Chiefs of Staff during the war -- William D. Leahy:

"[T]he use of this barbarous weapon at Hiroshima and Nagasaki was of no material assistance in our war against Japan. The Japanese were already defeated and ready to surrender. . . . [I]n being the first to use it, we . . . adopted an ethical standard common to the barbarians of the Dark Ages. I was not taught to make war in that fashion, and wars cannot be won by destroying women and children."

https://www.counterpunch.org/2011/08/05/the-decision-to-bomb-hiroshima/

Wally , August 19, 2018 at 6:32 am GMT
@War for Blair Mountain

also see:
The Bomb Didn't Beat Japan Stalin Did
Have 70 years of nuclear policy been based on a lie?

https://foreignpolicy.com/2013/05/30/the-bomb-didnt-beat-japan-stalin-did/

RealAmericanValuesCirca1776Not1965 , August 19, 2018 at 6:38 am GMT
What Trump really is remains to be seen. Could he turn out to be a neocon? Sure, it's possible. But so is the opposite outcome. That he actually is trying to drain the swamp. But one thing is for certain, Trump easily COULD have had us in a war with Syria or Iran by now, if he wanted. That he has not signed Americans up for another trip through the meat grinder for Israel (yet) speaks volumes about his unspoken intentions.

That said, this article makes it abundantly clear that this whole concept is going clear over Saker's head. So I'll go ahead and spell it out: Hyperbole is the goal with Trump's rhetoric about Israel's enemies .

His ALL CAPS rhetoric is tantamount to table scraps being tossed to the (((insatiable warmongers))) while he keeps his attention squarely focused on America. They NEED to be hyperbolic, he can't seem like he's half-assing them, as their goal is to serve as a substitute for the ACTUAL acts of war that the Zionists WANT. He needs to keep the yet-to-be-red-pilled masses who still ignorantly support Israel on his side, as they constitute a considerable portion of his domestic MAGA support base. The caps help to sell that impression. That he's all super serious and stuff.

[MORE]

And OF COURSE the Left is going to have a field day with those comments. He could be celebrating the cure for cancer in all caps and they'd still react the same way. How do you not know that by now? The extra nuggets one isn't half bad either, considering the left really can't meme at all. Humorless lot that they are.

Anyway. Surely you understand what a sudden, hard break with the "AngloZionists" after taking office would have done for his support at home? In the ZIONIST OCCUPIED GOVERNMENT of the USA. They'd simultaneously eviscerate him on the left and right. The pro-Israel evangelical and other layman Zionist demographics would turn on him in a heartbeat. Rabblerabblerabble antisemitism rabblerabblerabble. And, at a few million strong, they constitute enough of a force to sway an election if they did.

To be sure, I don't think we will have a clear picture of exactly what's in Trump's soul until his 2nd term. That's when he will make use of the stage he is setting to either go full neocon or full MAGA. But the man's unprecedented war on the media and swamp have already done irreparable damage to the status quo. The boot that has been firmly held on the throat of whites in America and the broader West has been lifted. Our long silenced voice restored. And before we were made minorities in our own lands, no less. The Overton Window is moving, rapidly, in our favor. The genie is out of the bottle and it's not going back. Even if Trump goes down.

None of this would have ever happened under Hillary or Jeb or any other candidate. And none of this benefits the "AngloZionists" or their agenda in the slightest. I don't think they foresaw a Trump presidency at all. For all intents and purposes, Trump appears to be expertly outmaneuvering their every effort to control his administration's foreign policy. And I think that it could turn out to be the case that surrounding himself with neocon stooges was a ploy to sell a specific image to certain demographics that he needed to have supplementing and reinforcing his base, but still have yet to realize that Israel is a part of the swamp too. Yes, there are millions of low information voters who are THAT dense.

Again. Could I be wrong? YES. But until I know for sure I'd rather continue to hope for the best and prepare for the worst instead of descending into borderline leftist brand hysterics here, comparing tweets and judging who is classier and whatnot.

Art , August 19, 2018 at 6:58 am GMT

And yet, 11 years later, the AngloZionist attack which looked so imminent in 2007 has not happened yet. Could it be that this time again an attack on Iran can be avoided? Ayatollah Ali Khamenei appears to be very confident that it will not happen. I am not so sure, but I fervently hope that he is right.

War or peace?

Hmm -- here are the leading minds on war and peace in this administration.

Donald Trump – Jared Kushner, Gina Haspel, Nikki Haley, Mike Pompeo, Mike Pence, Mad Dog Mattis, and John Bolton.

Feeling sick – everyone?

Think Peace -- Do No Harm -- Art

Anon [257] Disclaimer , August 19, 2018 at 7:04 am GMT
@eyesfrontmen

How do you know so much about Iranian women and their lives.?
What's PFMAT?

nettles , August 19, 2018 at 7:34 am GMT
@ Colin Wright

As to Saudi Arabia being wrecked -- explain to me how that harms Israel.

Explain why,

it's not necessary that the United States win its war with Iran -- just that it starts it.

Art , August 19, 2018 at 7:39 am GMT
Iranian Supreme Leader Ali Khamenei has summed up Iran's stance in the following words "there will be no war and no negotiations".

Saying that "there will be No War" is an implicit warning. Saying, that if there is a war – then everyone in the world will suffer -- therefor there will be no war – therefor no one will start a war.

Of course, the most dangerous man on the planet, wants an Iran war – the Israeli Jew – Netanyahu.

Think Peace -- Do No harm -- Art

p.s. Could Trump be sucked into an Iran war by a Mossad false flag operation – YES!

Akbar Ali , August 19, 2018 at 7:53 am GMT
Dear Saker,

There is a video on unz.com where Putin says the following about Israel:

Putin Goes Off Script: "the Deep State Is Ready to Sacrifice Israel"

http://www.unz.com/video/sayedhasan_putin-goes-off-script-the-deep-state-is-ready-to-sacrifice-i/

Saker, is it possible that you do a thread on the above video and share your thoughts on it?

To me it is very explosive!

Best regards,

Akbar Ali

The Alarmist , August 19, 2018 at 10:01 am GMT
@Quartermaster

Are you a State Department bot? At least Heather Nauert flashes a bit of cleavage while spouting her nonsense.

Dorian , August 19, 2018 at 10:52 am GMT
@Quartermaster

@QarterMaster the bigot:

Two can play at your game. I raise your ignorant words with facts:

Your words:

The US doesn't have to do anything to make negotiations impossible with Putin (and it is Putin you have to deal with as he's the head of the Kleptocracy masquerading as a country). Putin is too stupid to see what he's doing to his country, or he knows (more likely) and doesn't care.

The facts:

- The disintegration of US's discretion to manipulating international law to its own bias

- The saving of Russia from disintegration, as opposed to how Yeltsin, a US obsequious coolie nearly destroyed it.

- Ending the Chechnya war. Something no US administration has been able to do (that is, ending a war) successfully since the end of hostilities of the Second Word War.

- The development of social liberation principles and to back them up with funding in the Russian budget. Putin immediately raised all the pensions in the Crimea -a legally and justly voted return to the Russian Federation as opposed to how Stalin cynically and illegally gave it away to the Ukraine – to the same level as the rest of Russia. In fact, Putin has advanced many social support mechanics like FDR did during the 1930′s.

- Paying down the state debt. Not just paying it down, he is paying the debt down EARLIER than required. Something the US has NEVER done!

- Implementation of a multi-trillion dollar Stabilization and Wealth Fund for the country. Something the US has never done.

- Reform the Military Industrial Complex and the Military par se. Putin has got rid of the corrupt actors (many supported by the US) that were destroying the Russian military and Military research labs and turned them now into not only the best in the world, but Russia has now the most formidable weapons systems that Mankind has ever seen.

- Introduction of the economic cooperation union between independent states. Unlike the USSR the entire area is now buzzing with activity. With China, India, Iran and others starting to realize the West are not longer the economic centre of the world, but Asia is.

- The success of the Sochi Olympics and the World Cup. In fact, it is globally recognized that the last World Cup in Russia was the best ever.

- The return of the Crimea. It was always Russian -98% Russian population- and always will be.

- Fighting crime. Crime rates are at record lows, since the end of the USSR.

Your words:

Like it or not, the evidence is incontrovertible that MH-17 was shot down by a Russian AD unit. Even the fascists Putin inserted into the Donbas have admitted as much on video.

Now for the facts:

It is now becoming evident that the MH-17 plane was SHOT down by machine-gun fire
read: <a title="" https://www.globalresearch.ca/video-suppressed-evidence-machine-gun-like-holes-malaysian-airlines-mh17-was-not-brought-down-by-a-buk-missile/5648099"&#8221 ; href=" https://www.globalresearch.ca/video-suppressed-evidence-machine-gun-like-holes-malaysian-airlines-mh17-was-not-brought-down-by-a-buk-missile/5648099&quot ; MH-17 machine gun holes

In fact documentary evidence is now surfacing that is was Ukraine's Air Force that shot the plane down <a title="" http://thesaker.is/sbu-orders-to-destroy-all-evidence-of-the-conducted-special-operation-mh17/&quot ; http://thesaker.is/sbu-orders-to-destroy-all-evidence-of-the-conducted-special-operation-mh17/&quot; Evidence that Ukraine shot MH-17 down with Jet Fighters

Your words:

The Skripal case is a wonder. It is known that a nerve agent was used against the man and his daughter. The Swiss lab that tested their blood said the murder attempt was done with an agent that was used in the west. The only serious question is where it would have come from as both the US and the UK destroyed their chemical weapons years ago. The only people with motive and opportunity is Putin's regime. The murder would not have been first for Putin's regime either.

The facts:

Russia has destroyed all its chemical agents as it was inspected by the OPCW. But the US and UK have still theirs read: <a title="" https://new.euro-med.dk/20180316-the-skripal-novochok-affair-is-an-nwo-bogus-concoction-abusing-scientists-against-principles-of-secret-war-dooming-to-have-ww3-soon-russia-unforgivable.php"&#8221 ; href=" https://new.euro-med.dk/20180316-the-skripal-novochok-affair-is-an-nwo-bogus-concoction-abusing-scientists-against-principles-of-secret-war-dooming-to-have-ww3-soon-russia-unforgivable.php&quot ; US has Novichok, Russia doesn't

Your words:

Russia has long proven it is impossible to make an agreement with them and realistically expect them to live by it. It has been so since the Bolshevik Revolution, and once again since the mafia state put Putin at its head. Putin's behavior invading Ukraine shows he can't be trusted as Russia is one of the signatories of the Budapest memorandum guaranteeing the territorial integrity of Ukraine. This after Putin's regime stated that Crimea is Ukraine's.

The truth:

You are confusing the USSR with Russia. The Bolshevik Revolution was a revolution to depose a Monarchy, while the new Russia Federation was the out growth of the fall of communism. Putin NEVER invaded the Ukraine. The fighting that is going on in the Donbass (that's the part of Ukraine you are referring to, I suggest you learn something here), is between Ukrainian and Russian locals. Some 60% percent identify themselves as Ukrainian, and the rest as Russian. It is those Russians in the Donbass that are fighting, they are not invaders, they are locals.

It is quite clear that you're a Russia hater, Quartermaster. But not just a bigot but also very ignorant of the facts. Its because of people like you, there is war in the world. Intolerant, selfish, and bigots like you cause this evil we the rest have to live with.

I am only sorry to say, for people like you never change your hatred. That's why we have wars, because of the selfish bigots like you.

Herald , August 19, 2018 at 10:56 am GMT
@ohmy

As mentioned by someone else, whatever Quartermaster says is the opposite of reality, which is the classic hallmark of a troll. The first amendment can be the only reason that Quartermaster would be allowed to post such uneducated drivel.

Anonymous [221] Disclaimer , August 19, 2018 at 10:57 am GMT
@War for Blair Mountain

Problem being, White Christian Americans themselves identify as Israeli citizens.

• But our citizenship is in Jewheaven. And we eagerly await a Jewsavior. (((Philippians 3:20)))

• So now you Gentiles are no longer strangers and foreigners. You are citizens along with all of Jewgod's holy Jew people. (((Ephesians 2:19)))

Jewheaven being Jerusalem. And the Jewsavior being a Jew.

" We worship what we do know, for salvation is from the Jews ." John 4:22

American isn't deporting back to the middle-east what it worships.

Moi , August 19, 2018 at 11:15 am GMT
@Philip Owen

Always!

NoseytheDuke , August 19, 2018 at 11:21 am GMT
@Jeff Stryker

Afghanistan never was a threat to the US and had no more involvement in 9/11 than you or I did. The same people who are reaming you at the gas pump showed the same level of greed when negotiating with the Taliban over a pipeline so the Talibs said no and the invasion was the result. It was planned before 9/11 and the "Pearl Harbour" event provided the excuse for the sheeple.

The American people have lost far more than the Afghanis over this, they were dirt poor before and are dirt poor now. They had no freedoms before and have non now. They have Allah and for them it seems to be enough. Life in the US is far worse now for most than it was before the invasion.

Moi , August 19, 2018 at 11:22 am GMT
@Art

Quite a Confederacy of Dunces.

Anonymous [257] Disclaimer , August 19, 2018 at 11:29 am GMT
@Quartermaster

In for a penny, in for a pound, eh? Might as well make every statement in your post an egregious lie. You must work at a Burger King franchise and selling whoppers is your day job.

jacques sheete , August 19, 2018 at 11:36 am GMT

The contrast between the kindergarten-level low-IQ bumbling hot air and threats coming out of the White House and the words of Ali Khamenei could not be greater

That'd certainly be a very accurate diagnosis of a major source of the long standing problem, and Varoufakis said as much about the EU, ECB, and EC, and described it well in "Adults in the Room."

Another yooge problem is that the public in the West has been subjected to lopsided brainwashing via mass media, skooling (not education), and group pressure for decades if not centuries, and that they themselves are far from acting as adults ( i.e., responsible, thinking) as well.

In the US, our "leadership" has,with few exceptions, sucked from the beginning (yes, Washington was a first class jerk) and has steadily degenerated with no end in sight, yet some of our resident geniuses blame the world's woes on the "laziness" and "viciousness" of other people. This article is a fine antidote to that sort of mindless garbage.

It seems the leadership of Iran understands that one of the most effective ways to deal with bullies is to stand up to them. One does not negotiate with them, nor does one trust them and above all, one does not appease them. Our "leadership" could learn something from them, but will fail at that too.

battle of manchuria , August 19, 2018 at 11:39 am GMT
@Wally

https://en.wikipedia.org/wiki/Soviet_invasion_of_Manchuria

did the american atomic bombs were thrown to scare te soviets from invading Japan ? the soviets had just defeated the remnants of the japanese imperial army in Manchuria , in the battle of manchuria , and could have easily invaded japan

Jake , August 19, 2018 at 11:40 am GMT
@AnonFromTN

"The key strategic weakness of the neocon-run US is that it requires unquestioning obedience from its vassals."

The same was true of the British Empire. It was a strength until the bottom fell out.

The WASP mentality is one of totally self-righteous imperialism. It assumes that it must rule the world, no matter the cost to 'others', including non-Elites of the host nation ruled by WASP Elites.

Jake , August 19, 2018 at 11:41 am GMT
@NoseytheDuke

TRUE!

Jake , August 19, 2018 at 11:46 am GMT
@Dorian

"You are confusing the USSR with Russia. The Bolshevik Revolution was a revolution to depose a Monarchy, while the new Russia Federation was the out growth of the fall of communism. Putin NEVER invaded the Ukraine. The fighting that is going on in the Donbass (that's the part of Ukraine you are referring to, I suggest you learn something here), is between Ukrainian and Russian locals. Some 60% percent identify themselves as Ukrainian, and the rest as Russian. It is those Russians in the Donbass that are fighting, they are not invaders, they are locals.

It is quite clear that you're a Russia hater, Quartermaster. But not just a bigot but also very ignorant of the facts. Its because of people like you, there is war in the world. Intolerant, selfish, and bigots like you cause this evil we the rest have to live with.

I am only sorry to say, for people like you never change your hatred. That's why we have wars, because of the selfish bigots like you."

Quartermaster may be fully knowledgable. He may be a Jew with the very deep and wide hatred for Russia and Russians so common among Jews. He could be a foreign policy product of the 19th century Brit WASP desire to cripple Russia as a key part of grasping The One Ring To Rule Them All.

Those 2, of course, coalesced to become the heart of Neconism.

Jake , August 19, 2018 at 11:48 am GMT
@Akbar Ali

US Deep State sacrifice Israel? First, it would sacrifice all non-Elite white Gentiles in the world.

Biff , August 19, 2018 at 12:00 pm GMT
@NoseytheDuke

They had no freedoms before and have non now.

I've always have had a hard time figuring out what the heck people mean when they talk about "freedoms"?

jacques sheete , August 19, 2018 at 12:07 pm GMT
@Quartermaster

Iran is in the process, just like Russia, of rotting from within.

Maybe, but it's much more likely that the US is rotting from within, like this.:

The only plots against us are within our own walls, -- the danger is within, -- the enemy is within. We must war with , with madness, with wickedness

But why are we speaking so long about one enemy; and about that enemy who now avows that he is one and are saying nothing about those who dissemble, who remain at Rome

-Cicero, Second Catiline Oration, 63 BC

SolontoCroesus , August 19, 2018 at 12:10 pm GMT
@Ilyana_Rozumova

Trust me please on this one

Why?

jacques sheete , August 19, 2018 at 12:13 pm GMT
@Anonymous

You must work at a Burger King franchise and selling whoppers is your day job.

I doubt he'd ever be trusted near the till; he no doubts spends his time cleaning up after the "guests" have digested and discharged their whoppers.

jacques sheete , August 19, 2018 at 12:16 pm GMT
@Wally

BTW, Jews have been slinging since at least 1823.

Wally, I distinctly remember that yo attempted to mock me for bringing up history from the 1930s, saying that was "ancient" history and not relevant. Why is it now OK to go back even further?

Seraphim , August 19, 2018 at 12:16 pm GMT
I simply cannot believe that "Of course, Iran has been preparing for war with the US for almost 40 years now whereas the Russians only woke up to reality comparatively recently". 2014

Could you possibly believe that the wonder weapons Putin revealed to the stunned world took only four years to develop? Russians might be genial but they are not magicians who pull them from the hat. Such things require time to design, test, produce. Russians were preparing for war for much longer. I am always puzzled by the assumption that Russians are naive politicians, when thousand years of history shows that they have been anything but.

anon [317] Disclaimer , August 19, 2018 at 12:34 pm GMT
Saker gets an A+ for the article, a text book example of pure unadulterated propaganda. No corners cut, its 99% and 99.9% pure, not a trace of reality anywhere.
The CIA, M16, Mossad and Saudi Commission on Human Rights couldn't do better.
jacques sheete , August 19, 2018 at 12:35 pm GMT
@Erebus

Beyond a certain point, prosperity breeds not children, but decadence (in its widest sense), and eventually dystopia.

Good comment. Even fake prosperity, that based on debt, can have similar if not the same results.

Here's Cicero, again.:

There is one class of [internal enemies], who, with enormous debts , have still greater possessions, and who can by no means be detached from their affection to them. Of these men the appearance is most respectable, for they are wealthy, but their intention and their cause are most shameless. if they had been willing to struggle on against usury with the profits of their farms, we should have them now richer and better citizens.

There is another class of them, who, altho they are harassed by debt , yet are expecting supreme power; they wish to become masters. They think that when the republic is in confusion they may gain those honors which they despair of when it is in tranquillity

There is a third class who boast themselves extravagantly and insolently; these men, while they build like rich men, while they delight in farms, in litters, in vast families of slaves, in luxurious banquets, have incurred such great debts , that, if they would be saved, they must raise Sulla from the dead; and they have even excited some countrymen, poor and needy men, to entertain the same hopes of plunder as themselves. And all these men, O Romans, I place in the same class of robbers and banditti. But, I warn them, let them cease to be mad, and to think of proscriptions and dictatorships; for such a horror of these times is ingrained into the city, that not even men, but it seems to me that even the very cattle would refuse to bear them again.

There is a fourth class, various, promiscuous and turbulent; who indeed are even now overwhelmed; who will never recover themselves; who, partly from indolence, partly from managing their affairs badly, partly from extravagance, are embarrassed by old debts ; and worn out with bail bonds, and judgments and seizures of their goods, are said to be betaking themselves in numbers to that camp both from the city and the country. These men I think not so much active soldiers as lazy insolvents

There is a fifth class, of patricides, assassins, in short of all infamous characters, whom I do not wish to recall from Catiline, and indeed they can not be separated from him. Let them perish in their wicked war, since they are so numerous that a prison can not contain them.

There is a last class, last not only in number but in the sort of men and in their way of life: the especial bodyguard of Catiline, of his levying; aye, the friends of his embraces and of his bosom, whom you see with carefully combed hair, glossy, beardless, or with well-trimmed beards; with tunics with sleeves, or reaching to the ankles, and clothed with veils, not with robes; all the industry of whose life, all the labor of whose watchfulness, is expended in suppers lasting till daybreak.

-Cicero, Second Catiline Oration, 63 BC

jacques sheete , August 19, 2018 at 12:51 pm GMT
@AnonFromTN

The key strategic weakness of the neocon-run US is that it requires unquestioning obedience from its vassals.

True, and unfortunately for the US, it's an unquestioningly obedient vassal of Israel, and so this applies as well.:

As only a hopeless nonentity can be unquestioningly obedient, the US brings to power total shit, and speaking of that,

At the time, I didn't realize that the expertise on Middle East policy was not only being removed, but was also being exchanged for that from various agenda-bearing think tanks, including the Middle East Media Research Institute, the Washington Institute for Near East Policy, and the Jewish Institute for National Security Affairs.

-Jim Lobe, How neo-cons influence the Pentagon

http://www.atimes.com/atimes/Middle_East/EH08Ak01.html

skrik , August 19, 2018 at 1:11 pm GMT
@War for Blair Mountain

the bloated bodies of American Teenagers floating off the beaches of Iwoa [sic] Jima

See wiki, Atrocity propaganda [mentions 'to make people hate;' hmmm.] Then, see 'war porn.' Now, to 'nuts & bolts,' part repeat:

1. The US A-bombs cost a real motser; there'd be hell to pay if they weren't 'cashed in' for 'best' value. Hence the '½mio' [give or take; ymmv] US casualty estimate for invading = a filthy lie.

2. The US wanted to 'send a signal' to the USSR: 'You could very well be next!'

3. But most acutely, the US rogue-regime really, really wanted to get data from *live* targets.

It is not unlikely that the estimates of killed and wounded in Hiroshima (150,000) and Nagasaki (75,000) are over conservative

Mostly innocents, note; the 3 target cities were kept 'pristine' in reserve; had they been 'legitimate' war targets, not to attack them [like US did most other cities, only possible excuse = 'material war supporters!'] would be seen as 'aiding the enemy.'

Now, up close and personal: All are entitled to their own opinions, BUT: When an opinion 'parallels' the rogue regime narrative [almost = 99,9% in error], then one may ask "Hello-o-o?!" Others [Bliss, Wally, Wally] have given some other counter-arguments, *now* what's your excuse?

Paul's Comment , August 19, 2018 at 1:14 pm GMT
Your statement is racist/supremacist and in support of war crimes.
Michael Kenny , August 19, 2018 at 1:29 pm GMT
The now standard "Sunday roast"! The sneering tone of this week's sauce suggests a sense of defeat. For Europe, the priority is to remove Putin from Ukraine and, ideally, from power altogether, although the latter is probably the corollary of the former. Iran, like Syria, is a means to that end. The lesson of European history is that revisionists can only be dealt with by war. The lesson of American history, going all the way back to the war of 1812, is that, try as it might, the US cannot avoid being dragged into a general European war. By the way, I doubt if God needed to intervene during the World Cup. Any disruption of the event, from any quarter, would have made people furious all over Europe. That the author doesn't seem to be aware of role of soccer football in European society suggests that he is out of touch with the realities of Europe.
Avery , August 19, 2018 at 1:40 pm GMT
@AnonFromTN

{ nobody was willing to stick his neck out, as they knew that Un's noose is ready. }

What UN noose?

anonymous [112] Disclaimer , August 19, 2018 at 1:48 pm GMT
The Iranians are probably right in that there'll be no war or negotiation. Iran is a large country of 80M people and can't be handled the way smaller, less organized countries have been. When one looks at the price tag for the invasion and occupation of Afghanistan one can see the staggering sums involved in just trying to control that weak, disorganized area that's barely even a country. War with Iran would certainly be a drawn-out affair likely to deplete the public till and end up dividing the American public. And the precise war aims would be what, exactly? Whether one likes or dislikes the Iranians is immaterial; they're there and aren't going to go away. They intend to be a regional presence and nothing can deter this in the longer run. Insofar as negotiation goes they are saying the US doesn't engage in it but rather attempts to dictate to others. This is apparently true but depends on the level of pressure the US can exert which in this case isn't particularly strong, allowing them to remain defiant. Things may have simply shifted to the point where the US ability to actually do something about Iran has passed and all that's left is the anger and rhetoric.
Jeff Stryker , August 19, 2018 at 1:49 pm GMT
@Biff

So do they.

Avery , August 19, 2018 at 1:49 pm GMT
@Herald

{The first amendment can be the only reason that Quartermaster would be allowed to post such uneducated drivel.}

There is _no_ First Amendment protection in a private enterprise forum.
That should be obvious to anyone: Youtube, Twitter, etc, etc ban anyone they want, the most recent target being Alex Jones. There were lots before him.

unz.com can ban anyone anytime they choose to.
unz.com allows me, you, everybody to pos,t because they choose to allow.
No more, no less.

skrik , August 19, 2018 at 1:51 pm GMT
@Colin Wright

Somehow, somewhere, there is a glimmer of non-stupidity

Possibly, in the pentagon – as odd as that may seem. IIRC, Fallon said something very much like: 'No attack on Iran on my watch!' And there was a 'war-game' that the 'Iran' team would have won, if the game hadn't been stopped, all the 'sunk' ships re-floated, then the 'goodies' team was 'allowed' to fudge a win. Seriously, it may well be that Iran is just too tough a nut for even the retarded militaristic idiots running the pentagon – because their 'best advice' = a lose/lose for the US/Z attackers.

explain to me how that harms Israel

Simple: Since Nixon took the US off gold, the US has 'run on fumes,' namely the petro-$. IF that crashes THEN so does the US and its empire – leaving the Zs 'out in the cold.' Wa-a-ay out in the cold; so McCain: "Bomb bomb bomb, bomb bomb Iran!" Yay! rgds

Jeff Stryker , August 19, 2018 at 1:52 pm GMT
@NoseytheDuke

"Life is worse"

I find it unbelievable how far the standard of living has gone down since the 90′s. Oh sure, we have wireless internet and better phones but in the 90′s middle-class Americans lived in McMansions.

Today Gen Y is still living at home at age 30. In 1994 30 year old males OWNED a house.

DESERT FOX , August 19, 2018 at 2:00 pm GMT
The U.S. is a captive nation of Zionist bankers and the Zionist NWO and so is Trump who is just the latest in a long line of POTUS who are puppets of the Zionist cabal, JFK was his own man and they assassinated him and they thought RFK would become POTUS so they assassinated him also.

Proof of the captive state of America is the fact that Israel tried to sink the USS LIBERTY and killed 34 and wounded 174 and the attack was only called off when a Russian destroyer came upon the scene , and then there is the Israeli and Zionist controlled deep state attack on 911 where some 3000 Americans were killed and in each case Israel got away with it, and that is the definition of a captive nation, not to mention all the wars the U.S. has been involved in at the instigation of the Zionist bankers and the MIC.

Therefore as America is under zionist control for Irans leaders to say there will not be a war is wishful thinking for when the zionist give the order to go to war the U.S. will go to war and no matter what logic says that it is a mistake, the zionists rule and if they want the U.S. to attack Iran, the U.S. will attack Iran, it is a sure as grass is green.

Proof of this is Afghanistan/ Iraq/ Libya/ Syria/ Yemen/ Ukraine/Georgia/ etc., etc, America is under zionist control and the zionists are destroying America.

isthatright , August 19, 2018 at 2:01 pm GMT
Good article until you attacked the Church. Completely unnecessary.
AnonFromTN , August 19, 2018 at 2:51 pm GMT
@Avery

No UN noose, of course: the UN is neutered in general, with the Security Council neutered in particular by the fact that the members with veto powers include the Empire, two of its sidekicks, and two competitors.

I meant King Jong-Un's noose: he won't hesitate to sink an aircraft carrier or two, if he feels threatened. Besides, he has nowhere to run: he is in his country, whereas the US is thousands of miles away.

AnonFromTN , August 19, 2018 at 2:56 pm GMT
@jacques sheete

Do you think that's why we have exclusively shit for president for decades? You may be right. The establishment does all the choosing in rigged primaries, and when it comes to general voting, you have a choice between shit and even bigger shit. We are perfectly free to decide which shit is bigger – we call it democracy. Deep State rules either way.

War for Blair Mountain , August 19, 2018 at 2:57 pm GMT
@Wally

Your point is irrelevant as are the comments of the people you quoted. The only point of view that mattered in 1945 were the US Soldiers who were going to die in a US Military Invasion of Japan and their mothers millions of whom saw actor Eddie Albert's film footage in theaters across America of the floating bloated bodies of Native Born White Christian Teenage Males off the beaches of Iwo Jima and Guadalcanal kneeling in Christian Churches across the US wearing prayer veils and clutching rosary beads praying for their teenage sons to come home alive from the Pacific.

Everyone knew Japan was going to be defeated and was on its last Military legs so to speak. But this is beside the point. The war had gone on long enough and now how to be ended as soon as possible to minimize US casualities ..Hiroshima was nuked first no surrender a young Japanese officers coup was occuring to keep the war going to the bitter end .4 days later Nagasaki was nuked two days later Japan surrendered War over

skrik , August 19, 2018 at 3:02 pm GMT
@ohmy

My guess it was ferrying to the ME one or all of the nukes detonated since that day. You know the ones I'm talking about, Ankara, Yemen, Damascas, and/or China

At 1st, 2nd and still after the nth glance, this is either sheer [but hitherto unknown] genius – or [fa-a-ar more likely] sheer, bloody rubbish – please explain?!

[Aug 19, 2018] End of "classic neoliberalism": to an extent hardly imaginable in 2008, all the world's leading economies are locked in a perpetually escalating cycle of economic warfare.

Highly recommended!
Notable quotes:
"... But to an extent hardly imaginable in 2008, all the world's leading economies are locked in a perpetually escalating cycle of economic warfare. This global trade war is spearheaded by the Trump White House, which sees trade sanctions and tariffs, such as the onslaught it launched against Turkey, as an integral component of its drive to secure the United States' geopolitical and economic interests at the expense of friend and foe alike. ..."
"... But while they are deeply divided as to their economic and geo-political objectives, the capitalist ruling classes are united on one essential question. However the next stage of the ongoing breakdown of world capitalism proceeds, they will all strive by whatever means considered necessary to make the working class the world over pay for it. ..."
"... In 2008, capitalist governments around the world, above all in the US, derived enormous benefit from the decades-long suppression of the class struggle by the trade unions and the parties of the political establishment. The rescue operation they carried out on behalf of parasitic and criminal finance capital would not have been possible without it ..."
Aug 19, 2018 | thenewkremlinstooge.wordpress.com

Northern Star August 16, 2018 at 3:07 pm

http://www.wsws.org/en/articles/2018/08/16/pers-a16.html

"But to an extent hardly imaginable in 2008, all the world's leading economies are locked in a perpetually escalating cycle of economic warfare. This global trade war is spearheaded by the Trump White House, which sees trade sanctions and tariffs, such as the onslaught it launched against Turkey, as an integral component of its drive to secure the United States' geopolitical and economic interests at the expense of friend and foe alike.

The character of world economy has undergone a major transformation in the past decade in which economic growth, to the extent it that it occurs, is not driven by the development of production and new investments but by the flow of money from one source of speculative and parasitic activity to the next."

"But while they are deeply divided as to their economic and geo-political objectives, the capitalist ruling classes are united on one essential question. However the next stage of the ongoing breakdown of world capitalism proceeds, they will all strive by whatever means considered necessary to make the working class the world over pay for it.

This is the lesson from the past decade which, in every country, has seen a deepening attack on wages, social conditions and living standards as wealth is redistributed up the income scale, raising social inequality to unprecedented heights.

In 2008, capitalist governments around the world, above all in the US, derived enormous benefit from the decades-long suppression of the class struggle by the trade unions and the parties of the political establishment. The rescue operation they carried out on behalf of parasitic and criminal finance capital would not have been possible without it."

[Aug 18, 2018] Declining America Is Setting up Itself for Terrible Revenge After the Fall by Philip Giraldi

Notable quotes:
"... Considering the friendly recent exchanges between Putin and Trump, the punishment of Russia has to be viewed as something of a surprise, suggesting that the president of the United States may not be in control of his own foreign policy. ..."
"... One has to conclude that the United States has now become the ultimate angry imperial power, lashing out with the only thing that seems to work – its ability to interfere in and control financial markets – to punish nations that do not play by its rules. ..."
www.unz.com
Aug 17, 2018 | russia-insider.com
"As America weakens, Russia, Turkey, Iran and all the other countries that have been steamrolled by Washington will likely seek revenge." 145 There has been a dramatic shift in how the United States government carries out its business internationally. Admittedly, Washington has had a tendency to employ force to get what it has wanted ever since 9/11, but it also sometimes recognized that other countries had legitimate interests and accepted there was a place for diplomacy to resolve issues short of armed conflict.

The Bush Administration reluctance to broaden its engagement in the Middle East after it recognized that it had blundered with Iraq followed by Obama's relaxation of tensions with Cuba and his negotiation of a nuclear agreement with Iran demonstrated that sanity sometimes prevailed in the West Wing.

That willingness to be occasionally accommodating has changed dramatically , with the State Department under Mike Pompeo currently more prone to deliver threats than any suggestions that we all might try to get along.

It would be reasonable enough to criticize such behavior because it is intrinsically wrong, but the truly frightening aspect of it would appear to be that it is based on the essentially neoconservative a ssumption that other countries will always back down when confronted with force majeure and that the use of violence as a tool in international relations is, ultimately, consequence free.

I am particularly disturbed with the consequence free part as it in turn is rooted in the belief that countries that have been threatened or even invaded have no collective memory of what occurred and will not respond vengefully when the situation changes.

There have been a number of stunningly mindless acts of aggression over the past several weeks that are particularly troubling as they suggest that they will produce many more problems down the road than solutions.

The most recent is the new sanctioning of Russia over the Skripal poisoning in Salisbury England. For those not following developments, last week Washington abruptly and without any new evidence being presented, imposed additional trade sanctions on Russia in the belief that Moscow ordered and carried out the poisoning of Sergey Skripal and his daughter Yulia on March 4th.

The report of the new sanctions was particularly surprising as Yulia Skripal has recently announced that she intends to return to her home in Russia , leading to the conclusion that even one of the alleged victims does not believe the narrative being promoted by the British and American governments.

Though Russian President Vladimir Putin has responded with restraint, avoiding a tit-for-tat, he is reported to be angry about the new move by the US government and now believes it to be an unreliable negotiating partner.

Considering the friendly recent exchanges between Putin and Trump, the punishment of Russia has to be viewed as something of a surprise, suggesting that the president of the United States may not be in control of his own foreign policy.

Turkey is also feeling America's wrath over the continued detention of an American Protestant Pastor Andrew Brunson by Ankara over charges that he was connected to the coup plotters of 2016, which were allegedly directed by Fetullah Gulen, a Muslim religious leader, who now resides in Pennsylvania.

Donald Trump has made the detention the centerpiece of his Turkish policy, introducing sanctions and tariffs that have led in part to a collapse of the Turkish lira and a run on the banking system which could easily lead to default and grave damage to European banks that hold a large party of the country's debt.

And then there is perennial favorite Iran, which was hit with reinstated sanctions last week and is confronting a ban on oil sales scheduled to go into effect on November 4th. The US has said it will sanction any country that buys Iranian oil after that date, though a number of governments including Turkey, India and China appear to be prepared to defy that demand. Several European countries are reportedly preparing mechanisms that will allow them to trade around US restrictions.

What do Russia, Turkey and Iran have in common? All are on the receiving end of punitive action by the United States over allegations of misbehavior that have not been demonstrated. Nobody has shown that Russia poisoned the Skripals, Turkey just might have a case that the Reverend Brunson was in contact with coup plotters, and Iran is in full compliance with the nuclear arms agreement signed in 2015.

One has to conclude that the United States has now become the ultimate angry imperial power, lashing out with the only thing that seems to work – its ability to interfere in and control financial markets – to punish nations that do not play by its rules.

Given Washington's diminishing clout worldwide, it is a situation that is unsustainable and which will ultimately only really punish the American people as the United States becomes more isolated and its imperial overreach bankrupts the nation.

As America weakens, Russia, Turkey, Iran and all the other countries that have been steamrolled by Washington will likely seek revenge. To avoid that, a dramatic course correction by the US is needed, but, unfortunately, is unlikely to take place.

[Aug 18, 2018] Neoliberalism illness can't be cures other then by a "regime change"

Aug 18, 2018 | www.unz.com

Virgile , August 17, 2018 at 3:36 pm GMT

That is the true face of America that has emerged after having been hidden behind good manners success and glamour.
Trump is only a catalyst to that revelation. The illness have been there for long time disguised in a motto "We are a great democratic nation'. It is now showing its real and ugly face.
The USA's illness cannot be cured other than by a 'regime change'.
Maybe that is what is brewing..

[Aug 17, 2018] US sanctions mean the crisis of comprador capitalism in Russia

Substantially edited for clarity Google translation.
Aug 12, 2018 | pravdoiskatel77.livejournal.com

The US is preparing a new package of sanctions aimed not only against Russian banks, corporations, businessmen, but also against those who do business with them. The full list of Russian companies is in print, and I do not want to retell for the hundredth time what everyone already knows almost by heart: the names of companies and people's names. The main thing is that all of them are cut off from dollar payments, including financing of new Russian government bonds.

For senior managers of these companies, sitting between two chairs now ended in disaster. Poor Gref (Sberbank chairman) in vain so many years showed loyalty to the USA by not recognizing the Crimea. It did not help. He is in the list. The USA cut Gref with his Bank from the American financial market and does not care one bit that they hurt a deeply pro-American neoliberal comprador.

The Russian financial system, the core of which was that it is a part of world neoliberal financial system run from New York and London, the severing of its connection to the dollar market is a knockdown, if not knockout. And the question is not whether the sanctions will be approved "as is" or somewhat soften, it is clear what size of the suspended axe. Which can sooner or later fall on the heads of our neoliberals, because they are not neoliberal enough and did not depose President Putin. The neoliberal establishment of the USA can press, twist and simultaneously emasculate Trump even more. Trump is very weak, in spite of all the bravado and somewhat improved popularity ratings.

The neoliberal establishment of the USA proved that it can eats even popular presidents. If Trump survives the November midterm Congressional elections, he is highly likely will face even more fierce opposition at the next Presidential election. The "deep state" does not make the same mistake twice.

And then the successor will finish all that Trump failed to finish as for Russian suctions. Russia is facing the complete financial isolation with a ban on the import of modern equipment and export of oil and gas. Ahead drugs and consumer electronics, computers and other products. Those who do not believe in it, do not understand what is happening. Neoliberalism is wounded and like wounded animal attack on its enemies or even detractors with fierce force and determination.

How strong is the shock in the Russian elites from what is happening, shows the performance of Peskov. His reaction reminds us the beginning of the Patriotic war: everyone was waiting for it, but preparations are actually blocked "not to provoke Germans" and no one want to believe when it is started. Remember our pre-war military doctrines? "Fight in a foreign land and with little blood! " In life it turned out a little differently. And only thanks to the fact that sobering up happened quickly, the enemy was stopped near Moscow six months later.

Peskov looks like Molotov of our time. He spoke cautiously in the sense that we do not yet see the react to premature actions. Somebody in the USA really spoke in favor of severe sanctions. When (on August 22) there will be an official decision of our "American partners", then we will talk. And he added that should reassure everyone: "Russia's Financial system is quite stable, it is well known. It has proved its stability in quite difficult times. Against the background of the continuing unpredictability of our overseas partners, of course, we must and we keep our financial system in good condition. It's obvious". It would be better if he said another, very simple idea -- that Russia will adequately respond on all the attacks on its financial system.

Because the tense optimism does not bring calm. What is financial stability, when the rubble dropped more then 10% on the news. Just waiting for the sanctions? Essentially threat to impose those from the State Department on August 22. The ruble as a part of international financial system considerably dropped on the news. Speculators, dominant on the stock exchange and holding this market, began to massively withdraw from ruble assets.

Of course Peskov is still not Putin, he just is the spokesman for the President. Everyone understands that Russian financial system was stable until it was seriously hit. The" tough times" in the past about which Peskov talked were in comparison not that thought. Now we are facing a complete blockade similar to imposed on Japan before Pearl harbor. the design is to provoke us while Russia is still weak after the economic rape of 1990th. The same type of ideas that were behind operation Barbarossa. With the color revolution instead of armed invasion. So why there are people who do not understand this?

Sanctions are just one piece of the puzzle. Background of other action by CIA and NGO. The goal was voiced by some members of the US political elite. Rabid ex-head of the CIA Michael Morell of course behaves much like Zhirinovsky in Russia. With far less originality. But those reservations aside, he probably voiced real intentions of the USA ruling class when he called for "orange revolution" Russia in a manner of EuroMaydan in Ukraine. Which supposedly can be provoked by anti-Russian economic sanctions and economic blockade, which the Congress is in a hurry to adopt.

Everything is very open: sanctions will affect standard of living including decline of real value of pensions (and increase of pension age, already planned), increase is some taxes and prices of staples and communal services. Kind of Ukraine "after-Maydan" scenario without Maydan. At some point this really might take people to the streets. Unpopular reforms are often a desperate reaction of the government to sanctions. All sanctions since Obama's time are aimed at raising the middle class to revolt, and Morell is sure that this is what "Putin is afraid of most." He writes about it in the newspaper the Washington Post in the article "Putin is afraid of one single thing. Let's make him think it can happen." The uprising in Russia might also followed by establishing of another Yeltsin-style puppet regime. Round two of what happened after the dissolution of the USSR. One real problem here is that Putin will last just another six years. Then what? There is no clear mechanism of succession in Russian elite and it can step on the same rake.

That is, the US openly uses the attack on the Russian financial system to organize a coup, a yet another color revolution and bring to power Yeltsin-style puppets. The assurance that our financial system is reliable is an attempt to hide for us the fact how unreliable it is if hit by the USA hard. But if Putin spokesman Peskov does not say it right now, it does not mean that Putin does not see and does not take some actions.

The first step in right direction, forced by the previous round of sanctions was creation of a payment system MIR and an analogue of the SWIFT system. The second is a sharp drop of holding of US treasures. I think that the third necessary step will be the transition step-by-step manner to the nationalization of the top level banks of the Russian financial system -- a measure completely forced by the USA behavior and quite obvious. this can be hidden operation about which nobody should speak too loudly.

I recently wrote that the main feature of the Soviet budget was that it was formed as a result of the confiscation of the free retained earnings balance that arose after the distribution of the planned profit of enterprises, according to the established standards. Thanks to this system, the Soviet budget pulled not only the USSR and its republics, but also half of the world including a dozens of vassals and semi or temporary allies. And the collapse of the USSR happen due to betrayal of the elite, not because of financial problems, although they did existed and at the end of Brezhnev rule became acute. Still it happened mainly because the Soviet nomenklatura wanted privatization, wanted to change sides. It they did not became turncoats, despite all weakness and warts of the Soviet system we probably would still be living in the USSR.

The Soviet financial system was really very stable, because it was protected from the influence of sabotage of the West. Inflation did exist and ruble gradually lost it value during Brezhnev's reign, but that was it. Of course, famous Soviet "deficit" was also a form of inflation, but it was mainly visible in the area of "conspicuous consumption" -- luxury good, electronics and such. With the exception of meat (but not fish) staples were "mostly" available, although "real" prices on "black market" for them often did no correspond to the official prices. The Soviet Union has always, throughout its history lived under the sanctions, if not blockade by the West, but since 1960th population felt the effects only indirectly with severely limited access to Western consumer electronics, low quality and availability of domestic electronics, and such. I am not defending the Soviet system here, I just try to understand the situation.

Unlike the current situation with the ruble in the USSR, the current sanctions are instantly felt, as the exchange rate of the ruble changed and people see that: they feel that they became more poor even if consumer prices did not react. Also the fluctuations of the ruble cause price hikes on imported goods and the risk of bankruptcy of banks. The country's budget to a considerable extent depends on revenues from exports of raw materials such as oil and gas as well (to much lesser extent) as sales of Russian bonds to finance large infrastructure projects. It is wrong to believe that the new US sanctions will hit only the pockets of bankers and top managers. Real economy will also be hit. We are too dependent on imports and the dollar.

I write this to stress that the fact that the nationalization of financial system can take various forms, including the return to the Soviet style limitations on profit of financial institutions and some branches of economics. One step in this direction would be taking 500 billion rubles from the metallurgical and chemical businesses to the state budget. Just like that, no taxes. Advisor to the President Andrei Belousov wrote a letter to President Vladimir Putin, in which he pointed out that in metallurgy and chemistry for 2017, super-profits have accumulated due to the price situation, and not as a result of the actions of the management of companies. The market excess over the average price was 20.8%. Since similar excessive profits in oil industry are withdrawn to the budget in the form of super-income rents, why not do the same with metallurgists and chemists? Putin agreed in writing with Belousov by put a resolution "I Agree" on his memo. This is a socialist redistribution of the state profits of private capitalist enterprises. The NEP in its purest form.

Neoliberals are sad -- not good, they say, not the way "market economy" should work. F*ck them. Shareholders will receive less dividends. But what dividends consideration should be when the country is at war? During the war it should be war economics and it might make sense to return to some USSR practices, as the USSR economics was close to war economics all the time (and it was one on the major drawbacks of "socialist economy").

It is possible, as in the USSR, to take money from business in the form of confiscation by the state of the all of the profits, as many countries do during the war. Of course, this can be only temporary solution, but for several years it will definitely work.

In war, the country, one way or another, puts its economic wagon on the rails of the socialism. First of all, it is the principle of priority of national goals over personal ones. Neoliberals and financial oligarchy during the war are removed from power and, if they resist, of property. So far, they have been removed from part of the profits in two industries. The financial oligarchy is still intact. That needs to change.

But back to neoliberal financial system and banks. Those who are cut off from the dollar-or threaten to cut off with a high degree of probability of this event are now screaming. Let then scream. Sooner or later, but this should happen anyway, and that was clear to anybody expect to comprador financial oligarchy themselves, who enjoyed buying castles, football teams at the West and move their families. Now west will confiscate all those goodies without hesitation as assets created by stealing property in Russia and they can do nothing about it. In the famous film " Liberation " at the end there is a question: "What did fascism bring to the world?". We should also ask ourselves, "What has neoliberalism brought to Russia?".

Neoliberalism impoverished the majority of the Russian population and created a tiny strata of loyal to the USA Russian elite and professionals -- Russian compradors, which preferred to store money in the Western banks. Which currently should be bribed by Putin regime with some possibilities of continued unfair enrichment to keep them quite, so that they do not ally with the USA in case of color revolution, like some Ukrainian oligarchs such as Poroshenko and Kolomoysky did. But this bribery has not turned compradors from fifth column of the West in Russia, into Russian nationalists. They did refrain from revolt in 2011-2012, the USA attempt to stage "white color revolution" in Russia, but they do hate Russia. The problem is that they reproduce themselves, taking control in the field of education, training and placement of personnel in the economy. They also control media.

Neoliberalism has brought Russia's dependence on the export of oil and gas and import of sophisticated production technologies. The raw material elite despises mechanical engineering. Controlling raw materials and finances, she buys equipment in the West, sharing with him part of national resources for the technologies they need. And they take out loans in the West. And move their families to the West. And try to transfer the companies outside Russian jurisdiction. They believe that the elite of the West will be so closely tied to themselves -- here, they say, we will not only share in oil and gas, but we will use your money, your technologies, and we will support your engineering we will not try to replicate them domestically.

Neoliberalism has made Russia dependent on the supply of equipment even for space industry. The dependence is decreasing, but it has become so great that it is not yet possible to get rid of it. Nevertheless, our corporations and key banks for some reason are stuck to the ears in the schemes of pumping money through the United States. What are our military-industrial enterprises doing in the USA? Why they have offshore accounts? What part of this is played by our major banks? As we have recently learned, RosCosmos was stealing money from the state on a truly cosmic scale, and not only money. A lot of components were also bought from Western corporations and sometimes from shady dealers with low quality. And this situation lasts two decades during which it would be possible to create import substitution productions for major components, if desired.

Our civil airliner Superjet, includes a lot of Western components including engines. They can cut supply of them anytime. And no matter how the Ministry of industry and trade is trying to avoid this trap, the neoliberal financial model of Russia does not allow to quickly maneuver resources. It was easy to cut whole plants for scrap metal during economic rape of Russia in the 1990s. But to built a new factory, especially for producing high technology components is much more difficult, especially operating on the destroyed technical and personnel base and brain drain to the West. In the budget formed within the neoliberal paradigm, money for new technologies that is imported from the Wast are never allocated, as this situation is considered "normal". And its normal until the USA decided to put sanctions. After that it nothing close to normal. Also different industries are treated by the state differently. There is huge preference for extractive industries as they bring currency to the budget. When our oil and gas companies suffered financially in 2014-2017, the state came to their aid. Machine builders are not so lucky.

this technological dependence on the west is the most humiliating thing that neoliberals do with the country, that managed to put a man in space just 12 years after the end of the most terrible war. And the USSR did produce some "high-tech" components that now we are buying from the West such as large turbines. Add to this the the US defense specialists freely grazed on our military industrial complex, the crown jewels of Soviet technology, like sheep on a grass common for more then a decade (from 1991 till 2001)

Conversion to Neoliberalism now can turn be very expensive for Russia. How now to buy spare parts for imported aircraft ? How we can lease new aircraft? We have a country in six time zones. All that Putin can now-it is administrative measures to support the remnants of the industry, giving them orders from the Ministry of defense and helping with loans to produce narrow body passenger jets.

But small volumes of narrow body midrange passenger planes are not very profitable and always lose to foreigners who dominate the international market and control most of its volume. Add to this the possibility of kickbacks, corruption, unwillingness to use our own components such as engine. Although we do have aircraft engines are as reasonably quiet and as economical as those we buy in the West.

for example, the newspaper "Argumenty Nedeli" for years writes about the bitter fate of our aircraft engine NK-93, which is competitive with best Western engines and which at all exhibitions are always carefully hidden from Putin somewhere in the distant hangars. The reason is simple -- it is cheap. When you put on a Superjet imported engine you not only simply maintenance of those place in foreign airports, you can launder large sums of budget money. The scheme is simple: the money from the budget -- a contract with a foreign partner via some offshore company and some amounts are rolled back. Minimum of persons involved, maximum benefit. This way from budget to offshore is the shortest. What will happen now with Superjet is unknown. The lion's share of the components are French. It is logical to think about the fate of the Mistral. Or at least supply disruptions.

It is clear that no matter how heavy the costs of us sanctions are for the country, Russian financiers will not give up power they got due to neoliberalization. They will go out of their way to prove that their fate is the fate of Russia, and their death is the death of Russia. And it is necessary to first save them and then Russia. We have seen it many times and we will see it this scenario again and again.

Our largest sectors -- oil, gas, aviation and rocket industry -- also will suffer from the imposition of sanctions. Certainly shipbuilding will suffer. One thing is good that equipment to produce them still can bought in china. But some western technologies are out of reach. China itself buys technologies in America. So we are facing difficult times.

... ... ...

America with its sanctions directly pushes Russia even out of colonial peripheral capitalism. Let's hope that the new unique mixture of capitalism and socialism that will arise in Russia as a result of American sanctions will be a completely different system with completely different elites, whose hatred and distrust of everything Anglo-Saxon will be inherited through genes. And any attempt to bring unnnesary western technologies or products into Russia will be despised. It is reasonable to expect that the new generation of Russian elite is acutely anti-American. Every action generates a reaction. Hopefully sanctions will destroy the "neoliberal intelligentsia" and "neoliberal business elite" in Russia. First of all, the neoliberal financial system will be reformed.

As China under socialist slogans builds capitalism with the Chinese specifics, so Russia under neoliberal slogans will begin to build state capitalism with some socialist component -- with the Russian specifics. And it's not a matter of taste, it's a conscious necessity. Otherwise we simply might not survive. The foundations of the new system will be laid by Vladimir Putin in the struggle for the implementation of the May decrees in conditions for acute geopolitical tension.

I hope that from now on we should not pay any attention to the neoliberal rhetoric of the authorities -- it is the rhetoric of the smoke screen. The usual smoke screen to calm those who will be gradually removed from power and property. Whether they want it or not, Russia has already embarked on this path and hopefully will not be able to get off the neoliberal track. The collapse of neoliberalism in the form of the collapse of its financial system is probably inevitable, and ithe repretition of 2008 is coming. this might help gradually dismantled and change the financial system in the coming years. The global crisis will only help us in this task. The trend is clearly indicated and it can only change speed, but not the direction. Until this moment we need to accept the reality which the USA created with new round of sanctions and do our best to defeat them. They are no longer our partners. They are something else.

[Aug 17, 2018] Young Americans have soured on capitalism, and that's what got Trump elected Slavoj i ek

That's incorrect. They have soured on neoliberalism, and, especially, neoliberal globalization. Many want a return of New Deal capitalism in some form.
Neoliberal ideology is now discredited and the process of de-legitimization of the ruling neoliberal elite started when voters rejected Hillary.
15 Aug, 2018
Notable quotes:
"... "The roots of this disappointment can be easily identified" he told RT. "The working class, but also the middle class feels betrayed. Generally, there's widespread awareness that the American system doesn't function the way people expected it to function." ..."
"... "The message is very hopeful," ..."
"... a large part of the US population "no longer identifies with the American dream." He described the drop in support for Capitalism as the "beginning of the end of what in learned terms we call ideological hegemony." ..."
"... With more Americans feeling left behind, the only candidate who capitalized on this dissatisfaction in 2016 was Donald Trump. However, Zizek doesn't see Trump as the solution to America's problems. Even as the economic good times roll, recovery has not touched everyone equally. 40 million US citizens still live in poverty, and five million of these live in "third world conditions," according to a UN report released this June. ..."
"... "The only thing that can save the US is a stronger, more radical left," ..."
"... "should look at their own Democratic Party, how they totally ignored a clear, more leftist, anti-capitalist signal from Bernie Sanders and his movement." ..."
"... "failed the expectations of the American people" ..."
"... "I would ask her to remember how long I had to wait to get here," ..."
"... "I don't think that even those who spread this fear, that they take it seriously," ..."
"... "That's pure fear-mongering" ..."
"... "panicky reaction" ..."
Aug 17, 2018 | www.rt.com
Get short URL Anti-capitalist protesters in Washington DC © David S. Holloway / AFP Support for capitalism among younger voters has dropped drastically, a new Gallup poll reveals. The US establishment's refusal to see this shift has resulted in Trump's election, philosopher Slavoj Zizek tells RT. According to the poll , 57 percent of Democrats view socialism positively. Only 47 percent view capitalism positively, down from 56 percent in 2010.

Across political lines, young Americans (aged 18-29) in general are split on capitalism and socialism. 51 percent of Americans aged 18-29 view socialism positively, while 45 percent view capitalism positively, down 12 points in just two years.

Slavoj Zizek sees the shift as a realization that for some, the American Dream just isn't real.

"The roots of this disappointment can be easily identified" he told RT. "The working class, but also the middle class feels betrayed. Generally, there's widespread awareness that the American system doesn't function the way people expected it to function."

Curiously, the drop in satisfaction comes at a time when the US economy is booming. Unemployment is at its lowest point in half a century at just over three percent, wages are increasing, and if President Trump is to be believed, all manner of companies are clamoring to bring their manufacturing operations back to the USA from overseas.

In 2010, when more Democrats still trusted capitalism, things were objectively worse. Unemployment stood at a dismal nine percent, wages had stagnated since the great recession, and recovery was still a distant glimmer.

"The message is very hopeful," Zizek said about the poll, which he said shows that quite a large part of the US population "no longer identifies with the American dream." He described the drop in support for Capitalism as the "beginning of the end of what in learned terms we call ideological hegemony."

TV Anchor: It is inexplicable that so many voters have a problem with capitalism considering that for so many Americans

[pauses to check stats]

housing is unaffordable, student debt is skyrocketing & you need a GoFundMe page to afford medical care https://t.co/JxIIZYZ2Du

-- David Sirota (@davidsirota) August 13, 2018

With more Americans feeling left behind, the only candidate who capitalized on this dissatisfaction in 2016 was Donald Trump. However, Zizek doesn't see Trump as the solution to America's problems. Even as the economic good times roll, recovery has not touched everyone equally. 40 million US citizens still live in poverty, and five million of these live in "third world conditions," according to a UN report released this June.

"The only thing that can save the US is a stronger, more radical left," Zizek claims.

Where is the left?

The radical left Zizek talks about exists, but has been muscled out by the Democratic party's more centrist establishment. The establishment, he argues, "should look at their own Democratic Party, how they totally ignored a clear, more leftist, anti-capitalist signal from Bernie Sanders and his movement."

Sanders was a popular figure, particularly with young voters. By running Hillary Clinton instead, the centrist establishment "failed the expectations of the American people"

However, since Clinton's miserable performance in 2016, the 'progressive' movement championed by Sanders has slowly seeped into the mainstream. Nowhere was this more apparent than in the Bronx this June, when self-professed 'democratic socialist' Alexandria Ocasio-Cortez snatched a stunning primary victory, ousting ten-term incumbent Rep. Joe Crowley, a more centrist, suit-and-tie Democrat.

Ocasio-Cortez ran on a platform that includes Medicare for all, free college tuition, a $15 minimum wage, and abolishing Immigration and Customs Enforcement – some of these points the Clinton camp of the Democrat party would have considered anathema.

Ocasio-Cortez' victory appeared to lay out a clear roadmap for Democrats in the Trump age: embrace the public's demand for a more radical left and win elections, or continue to blame Russia and continue to lose. The Democratic establishment didn't listen however, with House Minority Leader Nancy Pelosi (California) playing down her victory, reminding voters that it happened in "one district" and warning people not to get "carried away" with progressive ideas.

Assistant Minority Leader James Clyburn (South Carolina) embodied the establishment mentality when he said in an interview that Ocasio-Cortez needs to wait her turn before joining the Democratic party's leadership.

"I would ask her to remember how long I had to wait to get here," the 78-year-old Congressman said.

After her victory, Ocasio-Cortez jetted around the country to drum up support for like-minded progressive candidates ahead of primary elections. Her stumping fell short however, as four out of the six candidates endorsed by the socialist upstart lost their elections.

Some critics put this failure down to an inbuilt 'fear of socialism' among Americans. Zizek disagrees emphatically.

"I don't think that even those who spread this fear, that they take it seriously," he said, adding that the US is unlikely to turn into Venezuela any time soon. "That's pure fear-mongering" and "panicky reaction" at the newfound popularity of socialism, he said.

If the trend revealed by the latest Gallup poll is correct, embracing a socialist message could soon be the Democratic party's only means of survival.

Subscribe to RT newsletter to get stories the mainstream media won't tell you.

[Aug 14, 2018] Neo-liberal phase is in state of collapse. It doesn't mean that capitalism is collapsing; but that its current form is collapsing and we're entering a new phase.

Notable quotes:
"... It has to adapt, and whether the new system will be biased to the ruling class or the masses, is still be revealed." ..."
Aug 14, 2018 | www.defenddemocracy.press

World acclaimed Marxist thinker Samir Amin dies

In an interview with Ahram Online in 2012 Samir Amin said that he believes that "this neo-liberal phase is in state of collapse. It doesn't mean that capitalism is collapsing; but that its current form is collapsing and we're entering a new phase. It has to adapt, and whether the new system will be biased to the ruling class or the masses, is still be revealed."

[Aug 14, 2018] Trump s Creative Vision for a New, Sensible, RealPolitik American Foreign Policy

Notable quotes:
"... Financial Times ..."
"... raison d'état ..."
"... balance of power ..."
"... Gilbert Doctorow is an independent political analyst based in Brussels. His latest book, "Does the United States Have a Future?" was published on 12 October 2017. Both paperback and e-book versions are available for purchase on http://www.amazon.com and all affiliated Amazon websites worldwide. See the recent professional review http://theduran.com/does-the-united-states-have-a-future-a-new-book-by-gilbert-doctorow-review/ For a video of the book presentation made at the National Press Club, Washington, D.C. on 7 December 2017 see https://www.youtube.com/watch?v=ciW4yod8upg ..."
Aug 14, 2018 | russia-insider.com

Tharoor quotes from New York Times columnist David Brooks who concluded that Trump's behavior was that "of a man who wants the alliance to fail." He quotes extensively from Guy Verhofstadt, a former Belgian prime minister and leader of the Liberal political fraction in the European Parliament fighting for a much more integrated EU, who sees Trump as the enemy of liberal internationalism and ally of his own alt right enemies in Europe.

Tharoor also brings into play Martin Wolf of the Financial Times , who delivered a scathing attack on Trump for his rejection of the West: " today the U.S. president appears hostile to core American values of democracy, freedom and the rule of law; he feels no loyalty to allies; he rejects open markets; and he despises international institutions."

In the 23 July issue of "Today's World View," Tharoor takes advantage of the time gone by since Helsinki to refine the conclusions. He offers a pithy commentary from Susan Glasser of The New Yorker : "We are witnessing nothing less than the breakdown of American foreign policy."

In the same issue, Tharoor notes that public reaction to Trump in Helsinki is less pronounced than one might suppose from reading the pundits. He offers the following remarks of colleagues on the results of a recent poll: "Most Americans do not feel Trump went 'too far' in supporting Puitn, and while more Americans say U.S. leadership has gotten weaker than stronger under Trump, his ratings on this question are slightly improved from last fall."

If we go back in time to the days following Trump's visit to the NATO gathering in Brussels, we find in the headlines of the 11 July issue another take on what Trump is doing:

"Trump's NATO trip shows 'America First' is 'America Alone.'"

Here we read about Trump's insistence that America "stop footing Europe's bill" for its defense, namely his demand that all NATO allies pay up 2% of GDP at once, not in the remote future; and that they prepare to double that to 4% very quickly. By intentional abrasiveness, these moves by Trump are, Tharoor tells us, "undercutting the post-World War II order in pursuit of short-term, and likely illusory, wins."

All of these comments address the question of what Trump opposes. However, Tharoor is unable to say what, if anything, Trump stands for. There are only hints: continued US hegemony but without the ideological cover; might makes right; nationalism and the disputes that lead to war.

Does this make sense? Or is it just another way of saying that Trump's foreign policy stance is an inconsistent patchwork, illogical and doomed to fail while causing much pain and destruction along the way?

I fully agree with the proposition that Donald Trump is ripping up the post-Cold War international order and is seeking to end NATO and the rest of the alliance system by which the United States has maintained its global hegemony for decades. But I believe this destructive side is guided by a creative vision of where he wants to take US foreign policy.

This new foreign policy of Donald Trump is based on an uncompromising reading of the teachings of the Realist School of international affairs, such as we have not seen since the days of President Teddy Roosevelt, who was its greatest practitioner in US history.

This is not isolationism, because Trump is acting to defend what he sees as US national interests in foreign trade everywhere and in geopolitics in one or another part of the world. However, it is a world in which the US is cut free from the obligations of its alliances which entail maintenance of overseas bases everywhere at the cost of more than half its defense budget. He wants to end the risks of being embroiled in regional wars that serve our proxies, not core US national interests. And he is persuaded that by a further build-up of military might at home, by adding new hi-tech materiel the US can secure its interests abroad best of all.

I reach these conclusions from the snippets of Trump remarks which appear in the newspapers of daily record but are intentionally left as unrelated and anecdotal, whereas when slotted together they establish the rudiments of an integrated worldview and policy.

For example, I take his isolated remark that the United States should not be prepared to go to war to defend Montenegro, which recently passed NATO accession, because Montenegro had been a trouble-maker in the past. That remark underwent virtually no analysis in the media, though it could be made only by someone who understood, remarkably, the role of Montenegro at the Russian imperial court of Nicholas II precisely as "troublemaker," whose dynastic family aided in their own small way the onset of WWI.

Donald Trump is not a public speaker. He is not an intellectual. We cannot expect him to issue some "Trump Doctrine" setting out his Realist conception of the geopolitical landscape. All we get is Tweets. This inarticulate side of Trump has been used by his enemies to argue he has no policy.

In fact, Trump is the only Realist on the landscape.

Going back to 2016, I thought he was being guided by Henry Kissinger during the campaign and then in the first months of his presidency, I misjudged entirely. Trump is true to the underlying principles of Realism without compromise, whereas Henry K. made his peace with the prevailing Wilsonian Idealism of the American Establishment a couple of decades ago in order to remain welcome in the Oval Office and not to be entirely marginalized.

Trump's vision of Realism draws from the source in the Treaty of Westphalia, 1648 with its guiding concept of sovereign nation-states that do not intervene in others' domestic affairs. It further draws on the notions of raison d'état or national interest developed by the French court of Louis XIV and then taken further by "perfidious Albion" in the eighteenth century, with temporary and ever changing combinations of states in balance of power realignments of competitors. The history of the Realist School was set out magnificently by Kissinger in his 1994 work Diplomacy . It is a pity that the master himself strayed from true and narrow.

In all of this, you have the formula for Trump's respect, even admiration for Putin, since that also is now Vladimir Vladimirovich's concept of Russia's way forward: as a strong sovereign state that sets its own course without the constraints of alliances and based on its own military might.

The incredible thing is how a man with such poor communication skills, a man who does not read much came to such an integrated vision that outstrips the conceptual abilities of his enemies, his friends and everyone in between.

We are tempted to look for a mentor, and one who comes to mind is Steve Bannon, who is very articulate, razor-sharp in his intellect and who provided Trump with much of the domestic content of his 2016 campaign from the alt right playbook. And though Bannon publicly broke with Trump in their falling out over his ever diminishing role in the Administration, Bannon's ongoing project, in particular his Movement to influence European politics and shift it to the Right by coordinating activities across the Continent during the parliamentary elections of May 2019, very closely parallel what Trump's ambassador in Berlin seems to be doing in Trump's name.

It may well be that the President and his confidantes find it prudent for him to play the hapless fool, the clueless disrupter of the global political landscape until he has the support in Congress to roll out the new foreign policy that is now in gestation.

The logical consequence of such a Realist approach to foreign policy will be to reach an understanding with the world's other two principal military powers, Russia and China, regarding respective spheres of influence in their geographic proximity. But I do not believe we will see a G-3 succeeding America's unipolar moment. Given the predispositions of both Russia and China, we are more likely to see a broader board of governors of global policy in the form of the G-20, ushering in the multipolar age. In such a formulation, regional conflicts will be settled locally by the interested parties and with the major powers involved only as facilitators, not parties to conflict. That promises a much more stable and peaceful future, something which none of Donald Trump's detractors can begin to imagine as his legacy.


Gilbert Doctorow is an independent political analyst based in Brussels. His latest book, "Does the United States Have a Future?" was published on 12 October 2017. Both paperback and e-book versions are available for purchase on http://www.amazon.com and all affiliated Amazon websites worldwide. See the recent professional review http://theduran.com/does-the-united-states-have-a-future-a-new-book-by-gilbert-doctorow-review/ For a video of the book presentation made at the National Press Club, Washington, D.C. on 7 December 2017 see https://www.youtube.com/watch?v=ciW4yod8upg

[Aug 13, 2018] The Annals of Roacheforque Back That A$$et Up ...

Aug 13, 2018 | roacheforque.blogspot.com

Sunday, August 12, 2018 Back That A$$et Up ... From the first sentence of Michael Sproul's There's No Such Thing as Fiat Money (2007) :

I make the claim that fiat money does not exist, and that the money that is commonly called fiat money is actually backed by the assets of its issuer.
Who would argue against the premise that modern currencies are backed by the issuer's assets? The questions that remain are: How broad a definition of "assets" is being considered? And does "asset backing" justifiably negate the meaning of "fiat", or is this mere semantics?

In any event, I would counter argue that the meaning of "fiat" is possibly in need of clarification. And such clarification would then allow for the sensible conclusion that fiat money does indeed exist. Sproul's premise is a good launch pad for clarifying just what it is that backs the US Dollar.

Many have said that the US military "backs" the dollar. And indeed, the US Deep State and its Military Industrial Corporatist alliance represents a huge investment in strategic worldwide military deployment. That investment is an asset, and it does in part back the dollar. There are other factors, that are considered in the foreign exchange marketplace, and there are varying opinions as to which factors bear such weight upon the prime factor : relative changes in purchasing power.

As we have discussed before, usage is a considerable factor in determining a currency's relative purchasing power, which in turn supports further usage, in a circular fashion. In times past, there were set fundamentals that established relative fiat currency exchange value: the country's stability, its industrial base, trade practices and metrics, population demographics and economic condition, debt to GDP, and so on.

As our real world has progressed into a world of derivative statistic and valuation, through the rise of financialization, those fundamental factors have evolved to include other factors that are brought to bear upon a modern digital currency's backing.

Does the depth of a currency in global derivative positions act as a form of backing? This is a factor which did not exist prior to the existence of derivatives. Does that depth not guarantee further usage, and that further usage not create greater depth? Does the currency function successfully as a systemic weapon against other currency issuers? Again, relatively recent dollar era phenomena.

But there is an incredibly powerful, hugely overlooked factor which begins only around 2008, which backs the US dollar. I will tell you now that it is the US Government's control over its people which gives the US dollar the largest share of "asset backing" of any other factor under consideration - in the FX market and otherwise.

When the US Government publicly bailed out the global banking system and made the American people the guarantor of that bailout, an incredible precedent was set. It proved to the families that the issuer of the US Dollar could obligate its tax base to an unrepayable debt, and that tax base would neither understand, nor care enough about the consequences of that precedent ... to stand up and fight against the fraud and thievery that keeps the 99% in perpetual bondage, and the 1% in a risk free position to do as they please.

The issuer has proven to generational wealth that it can divert the attention of the tax base from the world's most egregious robbery, and do it again every so often, including to other middle classes who hold wealth, as it moves from country to country. And they will do so in equally powerful police states, combined with well developed welfare states, as the fiat wealth concept manages the debt slaves of any culture, keeping them pacified under the doctrine of "debt as wealth".

You will watch in amazement as China eventually "becomes" the USA in this regard. To the North, there is one proud people, who thrive on the adversity which shapes their strong cultural identity - who will be a thorn in the dollar's side - but they will be dealt with, as opportunity allows.

This modern state of affairs is an incredible asset which the global corporatist banking cartel (the BIS led global central banking system) has endowed upon the US Dollar - and it's rival issuers are part and parcel to that system. Until China, India and Russia's central banks (along with their strategic but smaller allied CBs) achieve a true Coup d'etat (either publicly - or more likely privately) and begin to act independently from BIS mandate, the world's middle classes will never have any enduring prosperity - only the fleeting type that comes with targeted booms, busts and the fraud and bailouts they enable.

Much more importantly ... that Coup will NEVER HAPPEN as long as the American people agree to the dollar contract they are so deeply sworn to. Americans have been taught to accept the double standard they now live by. They can default on debt and lose everything they own, but their lenders can never default - they will be bailed out by whatever wealth remains. There is no other society on earth who have been so culturally conditioned to accept slavery and socialism as the generation of Americans whose OBEDIENCE backs the dollar today. That compliance, coupled with contempt for the wealth of their fellow man, and the social justice herd mentality, makes the family's smile with exceeding confidence ... that this dollar empire can milk much more middle class wealth across the globe as it spreads its "debt as wealth" religion even further into systemic entrenchment.

And this Trump fellow. He and Wilbur are doing well to earn the trust of generational wealth.

An unexpected wildcard can always be drawn, including an international war. But the Roacheforque's will profit from war as well - nonetheless, and just the same. Generational wealth aways profits from the spread of global corporatism, as they are both the authors and benefactors of it.

This we learn ... from the flower of understanding.

https://i.ytimg.com/vi/tuzJadb4vm8/0.jpg

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[Aug 12, 2018] Economics, Trumpism and Migration

Aug 12, 2018 | crookedtimber.org

likbez 08.11.18 at 7:52 pm 11

Still, to the extent that Trumpism has any economic policy content it's the idea that a package of immigration restrictions and corporate tax cuts[1] will make workers better off by reducing competition from migrants and increasing labor demand from corporations.

The emergence of Trumpism signifies deepening of the ideological crisis for the neoliberalism. Neoclassical economics fell like a house of cards.

IMHO Trumpism can be viewed as a kind of "national neoliberalism" which presuppose rejection of three dogmas of "classic neoliberalism":

1. Rejection of neoliberal globalization including, but not limited to, free movement of labor. Attempt to protect domestic industries via tariff barriers.

2. Rejection of excessive financialization and primacy of financial oligarchy Restoration of the status of manufacturing, and "traditional capitalists" status in comparison with financial oligarchy.

3. Rejection of austerity. An attempt to fight "secular stagnation" via Military Keysianism.

Trumpism sent "Chicago school" line of thinking to the dustbin of history. It exposed neoliberal economists as agents of financial oligarchy and "Enemy of the American People" (famous Trump phase about neoliberal MSM).

See, for example, a good summary by Sanjay Reddy ( Associate Professor of Economics, The New School for Social Research) at https://www.nakedcapitalism.com/2016/11/trumpism-has-dealt-a-mortal-blow-to-orthodox-economics-and-social-science.html

It is never clear whether ideas or interests are the prime mover in shaping historical events, but only ideas and interests together can sustain a ruling consensus for a lengthy interval, such as the historic period of financialization and globalization running over the last 35 years. The role of economics in furnishing the now-rebuked narratives that have reigned for decades in mainstream political parties can be seen in three areas.

First, there is globalization as we knew it. Mainstream economics championed corporate-friendly trade and investment agreements to increase prosperity, and provided the intellectual framework for multilateral trade agreements.

Second, there is financialization, which led to increasing disconnection between stock market performance and the real economy, with large rewards going to firms that undertook asset stripping, outsourcing, and offshoring. The combination of globalization and financialization produced a new plutocratic class of owners, managers and those who serviced them in global cities, alongside gentrification of those cities, proleterianization and lumpenization of suburbs, and growing insecurity and casualization of employment for the bulk of the middle and working class.

Financialization also led to the near-abandonment of the 'national' industrial economy in favor of global sourcing and sales, and a handsome financial rentier economy built on top of it. Meanwhile, automation trends led to shedding of jobs everywhere, and threaten far more.

All of this was hardly noticed by the discipline charged with studying the economy. Indeed, it actively provided rationales for financialization, in the form of the efficient-markets hypothesis and related ideas; for concentration of capital through mergers and acquisitions in the form of contestable-markets theory; for the gentrification of the city through attacks on rent control and other urban policies; for remaking of labor markets through the idea that unemployment was primarily a reflection of voluntary leisure preferences, etc. The mainstream political parties, including those historically representing the working and middle classes, in thrall to the 'scientific' sheen of market fetishism, gambled that they could redistribute a share of the promised gains and thus embraced policies the effect of which was ultimately to abandon and to antagonize a large section of their electorate.

Third, there is the push for austerity, a recurrent trope of the 'neoliberal' era which, although not favored by all, has played an important role in creating conditions for the rise of popular movements demanding a more expansionary fiscal stance (though they can paradoxically simultaneously disdain taxation, as with Trumpism). The often faulty intellectual case made by many mainstream economists for central bank independence, inflation targeting, debt sustainability thresholds, the distortive character of taxation and the superiority of private provision of services including for health, education and welfare, have helped to support antagonism to governmental activity. Within this perspective, there is limited room for fiscal or even monetary stimulus, or for any direct governmental role in service provision, even in the form of productivity-enhancing investments. It is only the failure fully to overcome the shipwreck of 2008 that has caused some cracks in the edifice.

The dominant economic ideas taken together created a framework in which deviation from declared orthodoxy would be punished by dynamics unleashed by globalization and financialization. The system depended not merely on actors having the specific interests attributed to them, but in believing in the theory that said that they did. [This is one of the reasons that Trumpism has generated confusion among economic actors, even as his victory produced an early bout of stock-market euphoria. It does not rebuke neoliberalism so much as replace it with its own heretical version, bastard neoliberalism, an orientation without a theory, whose tale has yet to be written.]

Finally, interpretations of politics were too restrictive, conceptualizing citizens' political choices as based on instrumental and usually economic calculations, while indulging in a wishful account of their actual conditions -- for instance, focusing on low measured unemployment, but ignoring measures of distress and insecurity, or the indignity of living in hollowed-out communities.

Mainstream accounts of politics recognized the role of identities in the form of wooden theories of group mobilization or of demands for representation. However, the psychological and charismatic elements, which can give rise to moments of 'phase transition' in politics, were altogether neglected, and the role of social media and other new methods in politics hardly registered. As new political movements (such as the Tea Party and Trumpism in the U.S.) emerged across the world, these were deemed 'populist' -- both an admission of the analysts' lack of explanation, and a token of disdain. The essential feature of such movements -- the obscurantism that allows them to offer many things to many people, inconsistently and unaccountably, while serving some interests more than others -- was little explored. The failures can be piled one upon the other. No amount of quantitative data provided by polling, 'big data', or other techniques comprehended what might be captured through open-eyed experiential narratives. It is evident that there is a need for forms of understanding that can comprehend the currents within the human person, and go beyond shallow empiricism. Mainstream social science has offered few if any resources to understand, let alone challenge, illiberal majoritarianism, now a world-remaking phenomenon.

nastywoman 08.12.18 at 4:11 am 16

and about@11
"for instance, focusing on low measured unemployment, but ignoring measures of distress and insecurity, or the indignity of living in hollowed-out communities".

How true – how true –
(and didn't I write that when Von Clownstick won? – and hardly anybody in economics believed it?)

and then there is this:
– "financialization, which led to increasing disconnection between stock market performance and the real economy, with large rewards going to firms that undertook asset stripping, outsourcing, and offshoring. The combination of globalization and financialization produced a new plutocratic class of owners, managers and those who serviced them in global cities, alongside gentrification of those cities, proleterianization and lumpenization of suburbs, and growing insecurity and casualization of employment for the bulk of the middle and working class".

So we might have to talk one day about if it truly is "obvious enough by now that support for Trumpism in the US and elsewhere is motivated primarily by racial and cultural animus, and not (or at least not in any direct way) by economic concerns"??

[Aug 12, 2018] One of FDR s Best Speeches: I welcome their hatred

Notable quotes:
"... @Not Henry Kissinger ..."
Aug 12, 2018 | caucus99percent.com

Not Henry Kissinger on Thu, 08/09/2018 - 1:35pm

JekyllnHyde on Thu, 08/09/2018 - 2:00pm
One of FDR's Best Speeches

@Not Henry Kissinger

Franklin Roosevelt's Address Announcing the Second New Deal - October 31, 1936

[Aug 08, 2018] "How Liberalism Self-Destructed"

Aug 08, 2018 | eand.co

[Umair Haque, Medium ].

"Liberalism, once a great and noble philosophy, split into three factions  --  neoliberalism, libertarianism, and "classical liberalism" (I'll come back to that one). These factions, like stone age tribesmen gleefully performing a lobotomy, hacked and chopped away at liberalism, blow by crushing blow, until all that was left was a drooling, snarling, spitting, twitching zombie: predatory capitalism [P]redatory capitalism created a class of oligarchs richer than the kings of yore  --  and in many ways, more powerful, too. Untouchable, above the law, beyond reproach. The wealthier this class of ultra-rich got, the more that the middle and working class collapsed. Inequality spiraled out of control. People lost faith in all the great liberal institutions  --  law, rights, constitutions, knowledge, democracy itself  --  because it seemed that the only real purpose of those institutions was to allow the ultra-rich to prey on the poor, exacting crippling tribute for the most basic of things. Not paid in wheat or silver, but cold, hard, cash. Insulin that costs $1000? Childbirth that costs $30K? These three factions made liberalism self-destruct  --  by turning it into a mechanism for the one exact thing, a millennium or so ago, it was created to destroy: feudal, dynastic, untouchable, predatory elites skimming off an economy's surplus, amassing all a society's wealth for themselves." • Not the sort of thing one expects from the one-time most popular author at the Harvard Business Review . The waters must have risen higher than I thought.

[Aug 08, 2018] US World Oil Production and ExxonMobil Outlook

Aug 08, 2018 | peakoilbarrel.com

Guym says: 08/06/2018 at 8:58 am

Earlier estimates of OPEC have now changed, and there is no increase from June. Probably, a slight decrease from SA. From OPEC sources, not Platts. I think they would start increasing if Iran drops, but not much otherwise. I think Sauds and Kuwait joint venture is set up for that potential.

Changing the way I gage things, into a much simpler format. Now, I look at world inventory drops, and look at current increases from OPEC and US. Neither will change much, so inventory drops should continue. Opec needs to come up with a lot more, or it will look damn scary in 2019. With pipeline constraints, Canada is pretty much out of the picture for further increases this year, and not much, elsewhere.

Energy News says: 08/06/2018 at 11:07 am
Yes the outlook for OPEC's July production is looking more flat now. This is a strange situation because Platts is one of OPEC secondary sources and so I assume that they see all the numbers

Argus – Surprise Saudi decline depresses Opec output
https://www.argusmedia.com/en/news/1729615-surprise-saudi-decline-depresses-opec-output

Yes all the tanker trackers are saying that OPEC exports fell in July, this is Reuters version
Reuters on Twitter: https://pbs.twimg.com/media/Dj541N2WwAAy55o.png

kolbeinh says: 08/06/2018 at 11:54 am
The Platts vs Argus divergence is for sure strange. It is easier to track exports than production numbers.
Monsieur George says: 08/06/2018 at 11:57 am
Thank you. This news confirms that world production is stagnating. Possibly very close to the decline. We will have to be attentive to the inventories. It will be the first place that the nations get hold of in order to supply themselves with oil.

[Aug 04, 2018] Tariq Ali Global revolt against corporate capitalism and inequality (On Contact)

Jun 12, 2016 | www.youtube.com

What we have is state funded capitalism

The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear. ANTONIO GRAMSCI (1891-1937). ITALIAN MARXIST THEORIST & POLITICIAN

https://www.youtube.com/watch?v=E4Tq9zdp9ZE

In the first episode of 'On Contact', host Chris Hedges discusses the global revolt against corporate capitalism with radical intellectual and author Tariq Ali. Ali talks about how the world banking system got Greece and other European countries in trouble, and how big capital may be behind the impeachment of Brazilian president Dil