A Foray into Monetary Policy and Tangentially Related Speculations

By James Kwak

Yesterday I wrote an Atlantic column about the bizarre situation that the Federal Reserve is in. Ordinarily, we think central bank independence is important because it permits the bank to take unpopular, anti-growth steps when the political branches of government want popular, pro-growth steps. But today we’re in Bizarro world: the political branches are intent on strangling the economy, so the Fed should be ignoring the political winds and stimulating the economy—especially since it’s clear that fiscal policy is off the table. Rick Perry just provided a last-minute dose of color.

Obviously Perry and the Republicans don’t want the Fed to stimulate the economy because they don’t want the economy to recover before the 2012 elections. But I think there’s something deeper here, which Mike Konczal gets at in this great post. Konczal summarizes the nineteenth-century gold-standard ideology this way: “Paper money decreases the power of the husband over his wife and the father over his family, loosens the natural leadership that serves as the best protection against ‘effeminate’ manners, and gives us a democracy without nobility.”

For policy wonks like me, inflation (short of hyperinflation) is just a transfer of wealth from creditors to debtors and hence a way to help bring overleveraged balance sheets under control and get people spending again.* But don’t take it from me; take it from Ken Rogoff, who is nobody’s idea of a socialist. I think Olivier Blanchard, chief economist of the IMF, has also said that in today’s world inflation should be 4 percent instead of 2 percent.

But for Rick Perry and people like him, there’s something immoral and unmanly about inflation and about paper money. He can stand there telling people that monetary expansion is devaluing the dollars in their pockets, and those people will nod their heads, even though (a) it isn’t—check the inflation figures—and (b) many of them are net debtors and thus stand to gain from a little more inflation. The basic problem is that Rick Perry and his audience (and probably many other people) see economic questions in primarily moral terms, and in their moral universe gold is better than paper and deflation is better than inflation. (That’s the obvious inference if you say that inflation is bad.)

I’m obviously not the first person to think of this. It’s the core of George Lakoff’s book Moral Politics, which is a great description of the conservative worldview combined with an unconvincing description of a liberal worldview that he wishes existed but I think doesn’t exist.

But I think it’s particularly relevant in light of today’s op-ed by David Campbell and Robert Putnam in the Times. Campbell and Putnam use interviews going back to 2006 to see what people ended up joining the Tea Party. And it isn’t new entrants to politics, or libertarians, or people with a thing for the Constitution. Using pre-Tea Party data, the predictors of becoming a Tea Party supporter include being Republican, political activism (contacting government officials), being white, “a low regard for immigrants and blacks long before Barack Obama was president” (even compared to other white Republicans), and wanting more religion in politics. (The best predictor is being a Republican; the second best is wanting more religion in politics.)

So if the Tea Party is basically the Christian Coalition all over again, why does it fly the banners of libertarianism, strict constructionism, hard money, and low taxes? One explanation is the billionaire puppet-master story, best exemplified by Jane Mayer’s story about the role of the Koch brothers and other traditional Republican elites in the rise of the Tea Party. I’m sure there’s something there. But another explanation is that the Tea Party, like the old religious right, is a movement based on a sense of moral outrage, and the style of the Tea Party appealed to a certain segment of the population. If you think the world went all wrong in the 1960s and abortion should be illegal and there what we need is prayer in public schools, you probably also think the Constitution must be eternally pure and gold is better than paper money—even if it’s not in your own economic interests. (Just like you probably don’t like distributing condoms to teenagers, even if it is an effective way to reduce the number of abortions.)

And this is why Rick Perry can go around spouting nonsense and still be a serious contender for the presidency.

* For the record, I’m a net creditor—I have money in bond funds and TIPS and no debt to speak of—so I stand to lose from higher inflation.

51 responses to “A Foray into Monetary Policy and Tangentially Related Speculations

  1. You say of Perry and his audience – “in their moral universe gold is better than paper”

    Yet Forbes’ Peter Cohan says (http://onforb.es/oyWAh7) Perry “has not suggested going to the gold standard”, while the Dallas Morning News’ Todd Gillman claims (http://bit.ly/q5cmjw) that Perry is perceived as “an establishment Republican who’s never made much noise for a return to the gold standard”.

    So I’m left suspecting that between the three of you, accurate reporting may not figure prominently in someone’s moral universe.

  2. Those Tea Party demographics are interesting, but more enlightening would be knowing how many economics courses they’ve taken. If it’s more that zero, they slept through class.

    Their answers to economic problems may have moral dimensions, but they’re totally informed by their own mistaken “common sense” which likens government funding to household budgets, a notion that Norquist and the Kochs will never disabuse them of.

  3. Well, of course the Tea Party was born from a sense of moral outrage.

    Sure, inflation is “just” a transfer of wealth from creditors to debtors. Which is to say, it consists of printing dollars and handing them to people who borrowed way too much money to buy way too much house because they thought they could get rich for doing precisely nothing. Oh, and making sure a significant fraction of those dollars stick to the fingers of megabankers.

    But surely you and Konczal are right, and the outrage is actually about nothing more than husbands losing control of wives and black Presidents and abortion. I mean, what else could those Neanderthal Republicans possibly be outraged about?

  4. Wow, no law school debt? You’re very lucky.

  5. i really don’t like saying this. i don’t like projecting this attitude and i really don’t like accusing someone i usually admire of being blatantly stupid …

    … a blind man could see inflation with his cane. what is your excuse for not being able to read simple indicators like PPI and CPI? how many businesses have released quarterly earnings and commented on rising input costs squeezing their margins? how many other economic reports show inflationary indicators rising?

    i suppose you could make the case that inflation, as practiced by the federal reserve corporation, isn’t evil … if wages and compensation were anywhere near keeping pace with it. but when prices can potentially double in less than ten years [which is the pace they’ve set for us!] and wages are going down for everyone not in the c-suite [or higher ed, or health insurers, etc] then we’re facing real, perceptible, evil inflation.

    i may have to re-evaluate my RSS subscription

  6. @ Michael, that was my take, too, on the inflation percentages mentioned in James Kwak’s post above.
    Fuel and food are rising way higher the 2% per annum, per my anecdotal-experiential sense, but I don’t think these are part of the CP index?

    I’m making more $$$, but things are costing more, and all the appliances and machines here seem to be conking out serially, so maybe this is just a rough patch, but I don’t think so.

  7. I tend to agree with MichaelD that overall inflation does not get a fair examination. Food, utilities, and gasoline, my biggest purchases, are all higher. Since my mortgages are fixed, there is no interest rate savings to offset these costs, which are major expenses. I am all for a little inflation, but it does not seem to apply to my major debts since they apply to property. I own commercial investment property, and ALL of those values are down quite significantly as is the income derived from them. So, in my case, cash flow is down significantly and inflation is eating away at the remainder. I do not see any governmental policy on the horizon which will help except job creation, which will definitely influence business opportunities and office tenancy. If that involves government spending on infrastructure, clean energy, mass transit, education, I will likely benefit from that as will the nation in the short and long term. On a nationwide basis, such programs and income creation may very well be great enough to help the economy, and reduce the debt burden, quite dramatically.

    Incidentally, also, how the hell does that racist bigot, Pat Buchanan, still get anyone to pay him for his opinions these days? (re: one of your links). Gov. Perry could be his ideological and diabolical twin — and he’s running for president!!

  8. Moses Herzog

    Hey, not that I disagree with James (I do in fact agree with 95% of James’ views on this topic), but I think we need to see the humor in this (although it is a type of dark humor, and this eventually could get scary in the later stages past the primaries).

    In fact, if Ron Paul and Rick Perry were actually in another party, instead of on their knees licking up whatever dog crumbs they find on the Republican stage, this would be incredibly humorous. Fortunately for Republicans, the Tea Party is composed overwhelmingly of illiterates, so they can’t get the extra party checkbox on state ballots. Can you hear the kingmaker Koch brothers thanking their Material Gold God???

    Koch Brother #1:”Wheeeew! Let’s wipe the sweat off our brow that these Tea Party folks can’t spell their own name, eh??? It would be a little scary if their party was actually another choice on the ballot.”

    Koch Brother #2: “Wait until we convince these toothless basturds that marry their cousins that public schools are a socialist conspiracy to turn their children into Satanists!!! Hahaha!!! After we cut more public education funds this king-making stuff will be easy street!!!”

    What might happen if Ron Paul wins a state (or takes more votes than Rick Perry in 3 or 4 states)??? Obviously a question Rupert Murdoch lapdog Mike Wallace and other Republican talkingheads are extremely afraid of. See here after 20 second advert:

    http://www.thedailyshow.com/watch/mon-august-15-2011/indecision-2012—corn-polled-edition—ron-paul—the-top-tier

  9. Moses Herzog

    Hey DUMBA$$ Obama advisors and DUMBA$$ Democrat campaign strategists!!! I’m screaming at YOU!!! Here’s a nice soundbite. Cut this Rick Perry audio into a TV political spot, run it until the tape breaks in “too close to call” states, and watch your worries become much smaller. The commercial narrator would open something like this: “Republicans claim Democrats always throw “W” Bush into the political conversation, but look who’s talking about “W” Bush NOW.

  10. Mr. Kwak it would be salutary on your part as a future professor with many students asking you questions to respond to MichaelD and the ever acerbic karl denninger on the PPI stats of the past several months.

  11. “Here’s what Libertarian’s and No-Regulation,… absent any Regulation gets ya?”

    We’ve got a VP in China begging the Chinese to come to America and rebuild our infrastructure!
    Obama will be vacationing again, while Perry slurs obscenities,… but he’ the pits, the lowest of low common denominators to throw his 50 gallon hat in the race – filled with petro mind you. He’s a real variegated scavenger,… this varment from Bush’Land?!
    The Tea Party has given the American Political System of Democracy a new name – “The Americana Politburo”, with the newly accredited ,”Presidium, Dirty-Dozen” shrinking our government into a artificial violet with blessings from,… “Russia with Love”?
    The “No-Government”, but Free’ Government “Tea-Bagger’s have given, or better said created a Dr. Chaos’ Anarchist! But who threw the first punch? It was Obama,..period!
    No Regulation has gotten us this —- Ref: “Is the SEC Covering Up Wall Street Crimes”, by Matt Taibbi @ RollingStone (8/17/11)

    http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crime-20110817

    http://www.sec.gov/about/sechistoricalsummary.htm

    http://www.en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commission

    Note: Grassley and Moynihan talk a good game but they’ve been in and out of the “Honey-Pot” minus the bee-hive too long, to have not noticed the going’s on,… pathetic! (JMHO)

    PS. Ollie “The Mad-Hat Shredder” gets away with “Iran-Contra”, and the precedence just keeps-on rolling along like a run-away underground train,… that cares not where the rail splits, the party-on-shots?
    PS2. Gold is now officially the “World”s Currency” until,…

    Thankyou James and Simon

  12. @Kwak, “….. And it isn’t new entrants to politics, or libertarians, or people with a thing for the Constitution.”

    Let’s pause for a second to hear WHY people have “…a thing for the Constitution”…especially considering, like it or not, it IS who WE ARE and we have AMPLE proof that whatever Nihilism we have going at nanosecond speed now DOES NOT WORK TO SECURE PEACE, SECURITY, OR FREEDOM for sane and normal minded human beings.

    For a bunch of paint-by-numbers GEN X wonks, how can you not SEE the dates – the year 1754 came before the year 1787…

    “The political push for the colonies to increase cooperation began with the Albany Congress in 1754 when Benjamin Franklin proposed an intercolonial collaboration that resembled the Articles. Starting in 1775, the Second Continental Congress acted as the provisional national government that ran the American Revolutionary War. It was an era of constitution writing—most states were busy at the task—and leaders felt the new nation must have a written constitution, even though they were uncommon in other nations. Meanwhile, Congress exercised an unprecedented level of political, diplomatic, military, and economic authority in the new nation. It adopted commercial codes, established and maintained an army and selected its generals, issued money, created a military code of law, defined crimes, and negotiated with foreign governments.”

    Note – The Second Continental Congress *issued money*.

    As time went on and it became clear that it was going to be an all out WAR since the Big Giant Head at the time was – well – READ the Declaration of Independence – an eloquent *psychoanalysis* and how a nasty nut job was INCOMPETENT to help people help themselves to a better life through honest work – the BASIC human right that IS equality for all…here’s the opening line, which is definitely where the polls say we are at – again – and that is NORMAL, actually….

    Date is July 4 1776…

    “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.–Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.”

    Need a link on the internet to the full document…?

    The Constitutional Convention was held in Philly from May 14 to Sept 17, 1787.

    Gen X has NOTHING that is either progressive, conservative, religious or economically SUPERIOR to the *thing with the Constitution* – get it?

    Progressive Nihilism and Conservative Wrecking Crews and Corporations as People?!

    And from 2011 – “Josh and I felt compelled to write this book (Reckless Endangerment) because we are angry that the American economy was almost wrecked by a crowd of self-interested, politically influential, and arrogant people who have not been held accountable for their actions.”

    Do you all GET IT why the latest JOKE of “government action* paraded out as the *debt debate* made us all even angrier? Almost wrecked was and still is in danger of BEING WRECKED! Like, duh.

    We gave each other IN WESTERN CIVILIZATION the RIGHT to improve our lives – each to their UNIQUE ability (which I’ll take over the mediocrity of monkey brain imagination *equality* any day :-)) – through honest effort and work.

    There is no “ism” now or in the eternal future, that will replace the TRUTH of that RIGHT. We have the RIGHT to improve our lives. MONEY did not come first.

    I hope I illuminated just a little bit the depth behind having a “thing for the Constitution”.

    Monkey brain math that sucks up the fruits of everyone’s labor is the *thing* that other people seem to have as a fetish…and the two *things* – fine, my fetish is better than yours – ARE at war, already!

    So how ugly do you all want this to get?

    I was put on the extermination list first – and I have the RIGHT to put those people on MY list….I don’t LIKE Orcs – especially *global* ones – most are from one million B.C. – and they gotta go….

    Everybody better start getting SERIOUS about these FINAL ongoing diplomatic negotiations BY THE LARGEST THIRD POLITICAL PARTY – THE INDEPENDENTS – to prevent the all-out ugly in USA.

    Constitutional Convention to forge an Energy Policy

    and

    BURN THE PATRIOT ACT.

    No one gave Koch or anyone else PERMISSION to take away the TRUE HUMAN RIGHT – the RIGHT to work to make our lives (and including up to 7 generations into the future) better through honest labor.

    Why is there constant devastating famine in Africa? NO INFRASTRUCTURE TO GET THE FOOD WHERE IT NEEDS TO GO….and the Middle East *civilization* has been sitting on Africa for how many millenia?

    So why are they buying parking lots in cash-strapped Chicago instead…?

  13. A correction: you wrote, “inflation (short of hyperinflation) is just a transfer of wealth from creditors to debtors.” I think you should rewrite that to be “an increase in inflation is just a transfer of wealth from creditors to debtors.” I.e. there is only a transfer of wealth when actual inflation does not match expectations. Expected inflation is already baked into the equation between debtors and creditors.

  14. But for Rick Perry and people like him, there’s something immoral and unmanly about inflation . . .

    For policy wonks like me, inflation (short of hyperinflation) is just a transfer of wealth from creditors to debtors and hence a way to help bring overleveraged balance sheets under control and get people spending again.*

    Oops, I think you made at least one point in Perry’s favor. A transfer of wealth from creditors to debtors — yeah, a transfer of wealth from grandma the saver, and other people who live within their means, to others who carry debt (responsible or not).

    Call it whatever you will, but it is part of the pillaging mindset of banksters and, apparently, policy wonks who can’t see beyond their ivory towers into the realm of ethical and moral behavior.

    p.s.

    I don’t mind sovereign paper money.

    I do mind the debt-as-paper-money paradigm.

  15. The ideas spewed from Johnson and Kwak have become some of the most regressive-couched-as-progressive economic perspectives out their. Boy have this guys lost their way. Or perhaps some money has come their way and they’ve become accomplices. Too bad. They once seemed to have a moral compass.

  16. james in london

    James … I guess you can’t quite believe there are people who are economic liberals (“conservatives” in your parlance) and social liberals (“progressives” in things like drug legalisation, prostitution legalisation, anit-war) – but there are. And we are growing. We are Libertarians. Your “more religion” in politics is probably nothing more than a deeply felt hostility to full-time corrupt career politicians … see the ferment in India at the moment with Anna Hazare.

  17. James Kwak: “For policy wonks like me, inflation (short of hyperinflation) is just a transfer of wealth from creditors to debtors and hence a way to help bring overleveraged balance sheets under control and get people spending again.* But don’t take it from me; take it from Ken Rogoff, who is nobody’s idea of a socialist. I think Olivier Blanchard, chief economist of the IMF, has also said that in today’s world inflation should be 4 percent instead of 2 percent.”

    Kenneth Rogoff: “But the real problem is that the global economy is badly overleveraged, and there is no quick escape without a scheme to transfer wealth from creditors to debtors, either through defaults, financial repression, or inflation. ”

    Proper double-entry book-keeping terminology is sadly being mangled by the jargon of James and Kenneth. This is as sad a state of affairs as the problem they would like to help solve.

    In an entity’s book of accounts, when the entity is trading goods and services in the marketplace, the act of bringing the artifact in trade to the marketplace is the entity playing the role of debtor. The debtor dollar entry into the book of accounts is for value created through forms of work. That same entity makes a second data entry as creditor. The creditor entry negates the entity’s rights to the ownership of the artifact in trade, in light of dollars paid in exchange for the traded value.

    The debtor’s relationship to creditor is like two sides of one coin. Jargon that speaks of one side of a coin without including the other side is as dangerous as the problem that the jargon hopes to solve.

    It is primarily entity’s debtor-state of value in trade that generates entity’s Statement of Profit [loss]. It is entity’s composition of rights to ownership in exchange that generates entity’s Balance Sheet.

    It is a dumbed down culture looking for quick and dirty leverage that makes the statements that James and Kenneth have made above. The mortgage bond scheme of the 00 years, transferred dollars via a Ponzi Scheme that used a vulnerable monetary system to support a truly grandiose Ponzi Scheme. The Ponzi players have been free from clawback of any sort. With the citizenry left vulnerable to a damaged monetary system, propaganda becomes the way of life that typically dominated Germany when their monetary system was crushed in 1930.

    The danger in trying to repair the cultural damage that this, and other Ponzi Schemes, have inflicted on Our Nation is in the jargon that is based in fantasy and not facts. Taking about a Balance Sheet while not talking about the Statement of Profit [loss] that generated the balance sheet, taking about a debtor in trade without simultaneously talking about the creditor in exchange, these are aftershocks of the Ponzi Scheme that is as damaging as the Ponzi Scheme itself.

    James and Kenneth, to be genuine leaders of a recovery, need to learn the data model that offers the only chance of a peaceful rebalancing of the deep cultural wounds that have been inflicted on Our Nation.

    Every living being does book-keeping in their heads as a way of maintaining an economically stable life. The standard term for this activity over the centuries is ‘common-sense’. Our citizenry today is confused by leadership on all sides of the political spectrum that has abandoned The Book of Accounts, and in doing, abandoned the common sense that has been built into The Book of Accounts for 670 years now.

  18. Rodney Dangerfield

    Trying to make threats to the elite Annie will get you no where, your ending will be like mine. And I didn’t get no respect.

  19. @Nemo – If you need further evidence of the Tea Party – Religious Right connection, just look at Perry’s recent flip flop on gay marriage. In the span of about 3 days, he went from a position of “it’s a states’ rights issue, every state should be free to decide for themselves” to “I oppose gay marriage and support a constitutional amendment banning it”, largely due to Tea Party reaction to his first stance.

  20. Cutting spending is not how you get out of an economic downturn. The GOP/Tea Party doesn’t agree with this, which is why I’d like to see them lose their majority in the House. It’s a policy thing.

  21. Moses Herzog

    Some of the inflation is legitimate, and if you have very low income, it will take a big bite out of your pocket.

    But in defense of Mr. Kwak, if you look at the commodity indexes, they have been going down since around the last week of April. You can look here at Bloomberg:

    http://www.bloomberg.com/markets/commodities/futures/

    Another point which Mr. Kwak might find more useful than brushing away inflation with a wave of the hand, is focusing more on the cause of inflation. What is the cause??? Some folks like Karl Denninger and blogger Bruce Krasting would have you believe that Bernanke can wave some magic wand, and “with Ben Bernanke’s magic wand he diabolically plans how to make American’s life more painful.” Probably Ben Bernanke prays and dreams every night he could control prices with the wave of a wand, but in fact this image only exists in the minds of folks like Denninger and Krasting, whom I can only guess have watched Disney’s Fantasia too many times:

    The reality is high resource demand from growing economies like China, India, and Brazil, and political instability in the Middle East countries have caused rising prices more than anything Chairman Bernanke has done. You also have to account for bad harvests which effect supply. See here:

    http://krugman.blogs.nytimes.com/2011/02/05/soaring-food-prices/?smid=tw-NytimesKrugman

    Also something called speculation sometimes is mistaken for “inflation”. Look at the one year graph for WTI crude and you might start to get the idea. http://www.oil-price.net/

    The problem for Karl Denninger and Bruce Krasting is, the answers above are rational and reality based, and with reality based answers sometimes you can’t fearmonger, assign political blame, or even be a drama queen.

  22. @ Dan_Palanza: Great post, great point.

  23. I’m interested in the part about predicting what makes a Tea Party member and the overall morality. The other day, I was sitting down with a State Rep from Philadelphia. A Dem. And the Tea Party crowd came up. He said, very clearly, that the Tea Party reps in the PA State House are definitely not Christian Coalition types. He said they aren’t religious at all.

    His take was that all they cared about was money. Money, money, money. Keeping as much of theirs as they could and damn anyone who couldn’t make enough to take care of themselves.

  24. @ btraven

    Mr. James Kwak has written a thought provoking article stimulating many minds into over-drive,…Bravo!
    Others question you James, but not I – “killing-the-messenger”, isn’t in my makeup. Keep up the ,… keeping -up,… :-))

    Thankyou James and Mr. Simon Johnson

    PS. Controversy stirs the intellectual grey-matter, lighting up the dull days of summer?

  25. That is the 64 dollar question Brady, how does one KNOW if another has any moral sense. Once you’ve answered that modestly, then its eaiser to measure their abilities and intentions. Right now its a free for all as long as you check your proof at the door.

  26. I think I will just join Obama on vacation at Martha’s Vineyard.

  27. “For policy wonks like me, inflation (short of hyperinflation) is just a transfer of wealth from creditors to debtors”

    This is actually a key point. Government inflation (and current interest rates below inflation) is involuntary transfer of wealth from savers to spenders. So a Texas homeowner with 20% equity is paying the California homeowner who repeatedly cashed out the bubble price of his house and immediately spent the money. While this may viewed as good for near term GDP it creates significant moral hazard and future costs a those that spent have no reserves when they retired and those that saved see their saving redistributed to the spenders.

  28. @rodney – “Trying to make threats to the elite Annie will get you no where, your ending will be like mine. And I didn’t get no respect.”

    You just keep believing that 100 million people are going to get no where….

  29. @Dan P – “The danger in trying to repair the cultural damage that this, and other Ponzi Schemes, have inflicted on Our Nation is in the jargon that is based in fantasy and not facts. Taking about a Balance Sheet while not talking about the Statement of Profit [loss] that generated the balance sheet, taking about a debtor in trade without simultaneously talking about the creditor in exchange, these are aftershocks of the Ponzi Scheme that is as damaging as the Ponzi Scheme itself.”

    Will GenX grifters change their ways?

    “….We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness….”

    Grifters WANT to create misery because:

    More misery for others = More $$$ for ME ME ME

    Being raised by a pack of wolves would have made them more ethical than being raised on Ayn Rand’s teat…

    I started out following da $$$ conversation because of the urgent need to rescue scientific work from corruption and fraud but when the BELIEF is “…..in the beginning there was *MONEY* and then came life…”

    looks like that BELIEF needs fixing…

    Notice how all “isms” are proven, scientifically, to be bogus when confronted with the unalienable HUMAN RIGHT to keep misery at a minimum through HONEST WORK…?

    Obambi needs to stop worrying about the *lone wolf* scenario…

  30. A little humor for today’s roller coaster ride: an old wall street adage –
    “If I owe you $10,000 it’s my problem,… but if I owe you $1,000,000 it’s now my problem :-))

  31. Man, did I messed that up — but, if I owe you $1,000,000 it’s now your problem (creditor vs. debtor)

  32. “Rick Perry and his audience (and probably many other people) see economic questions in primarily moral terms”

    Democrats, and I’m one, need to present economic questions on moral terms. Westin is correct.

  33. Annie, I’m not necessarly believeing it, I don’t think you can flash mob that many folks into doing anything, more less whatever it is you imagine they can do. It all interpretive, created equal can simply mean the difference between being born from a womb verses a tube. You jump off on some tangent and rant and rave at a 6th grade level believeing 100 million folks are going to side with your team and it just aint so. You’ve been saying the exact same thing for many months now and I am not seeing it yet, space cadet. its no put up with you and no shut up either.

  34. I’m tickled pink about the culprit of the past few days of economic turmoil admiting he is the driving force behind it. I’m talkin about Donald Trump, he has convinced people to move thier money to switzerland causing a panic in the european mkts and then rippling to the smaller US economy. Move your money to a secure place where the cocaine flows as freely as the glaciers they look down upon, and you can be with all your real friends and not worry about making money anymore, but spending it. Yes, you will have fresh air, and all the maids, meals and deals, just like the Trump brochure stated when you signed on the dotted line. Oh, it will be fun in the sun, and no worries from here on out. No ships or sails, I’m on board, aint you boys on board?

  35. @anony mouse

    you would not feel the need to slap me if my 6th grade ranting was not hitting the mark

    you scummy global grifter

    10% approval rating of congress – that’s not the end of your con?

  36. I don’t really do congress, its nothing but a trust of the people, which amounts to nothing but a costly war machine always needing funding, advice, power, can’t even do their own taxes. Another tangent, missing its mark.

  37. August light is so perfect.

  38. @Anony mousy – sounds like you do a lot more navel gazing than anything else….ooops, did I break apart your zen-ness?

    too bad you can’t see the humor in your choice of name and the passive aggressive attack

    Considering how little you contribute of your genius on this board, I’m flattered you considered it worth your time to critique me about being non-linear – a condition which was diagnosed for me in the 1970s. Only 11% of people think in 3D. So there’s absolutely nothing wrong with how I think, speak, write, or LIVE, it’s simply that you don’t get it.

    But 6th graders probably do :-)

  39. well, I guess there isn’t going to be a “retraction watch website” for “economic” math formulas – even though Greenspam admitted to making an *error*….

    and that 2 trillion – no prob

    6th grader would probably get a red x for that error…

  40. Bruce E. Woych

    @ James Kwak ….. Boring snooze, dribble…politica; chit chat…ditty ditty bang bang and he said she said

    INDEED !!!!!

    A Tangential exploratory on substance and foundation before reality based “discovery” can be framed and defined.
    Start a trend …take a risk …become a Baseline Leader and Reframe your perspective as:

    http://en.wikipedia.org/wiki/Honest_services_fraud

    Are you becoming a conventionalist and consensus jurist or an original critical thinker. Your insider Sophistication is bringing me down !

    http://en.wikipedia.org/wiki/Honest_services_fraud

    discussion @

    http://www.signonsandiego.com/uniontrib/20060112/news_1n12compare.html

    Vagueness of statute on corruption stirs dispute

    ‘Honest services’ fraud law gets frequent use

    By Kelly Thornton
    STAFF WRITER

    January 12, 2006

    You should be the legal specialist for Baseline by now and merge the issues under political finance with more”finesse” and substantial zeal.

  41. Why Annie thats quite an impressive bowl of alphabet soup you are juggleing, if you need help with a few letters I know of some circus entertainers up for the task. The better question is weather you could have broken my zen, or was that supposed to be left up to me. I don’t recall mentioning your lack of linearity or of your condition in the 70’s, but you have had plenty of time to recover from that, plus get married and even have kids if you so choose. If you do, hopefully they won’t have the same frustrations I sense in your posts at your age, 3D or not.

  42. Jamesy my boy,
    You wanna be the real basketball expert??? I mean a real basketball expert?? How about a great teacher??? You go online or your University’s library, or amazon books and try to get your hands on everything written or said by this man: Abe Lemons

    James, this guy, Coach Abe Lemons, one of the top 5 basketball coaches of all time and probably its greatest gentleman, is gonna explain to you why 1 egg is worth more than at least 3 Republicans (you may need to turn the volume up a little before playing this):

  43. Bruce E. Woych

    @JAMES…more “foray-ing” and the like down the meandering “tangent-scendental” supply lines.

    From the…The Ironic and counter-intuitive:

    http://pogoblog.typepad.com/pogo/2011/08/us-agency-that-promotes-anti-corruption-is-sending-businesspeople-to-russia.html

    …to the;

    The Normative and Judicial:

    http://www.trade.gov/goodgovernance/publications.asp.

    A free online course in Business Ethics, based on the Good Governance Business Ethics Manual and jointly produced with the World Bank Institute, is also available online at: http://www.worldbank.org/wbi/.

    How to “due diligence” in Political Intelligence and Commerce.

  44. Bruce E. Woych

    http://www.commondreams.org/view/2011/08/17-6

    “The Federal Reserve, then, is not an institution with “public purposes and private aspects,” but exactly the opposite. Like our federal government itself, it is a cartel with ruthless, private objectives hidden behind a public façade.

    The Fed has private purposes and public aspects, and as long as this parasite controls our wallets and government, you can count on more wars, bankruptcies, foreclosures, increasingly severe inflation and looting frenzies of every kind.”
    Published on Wednesday, August 17, 2011 by CommonDreams.org
    Looting Frenzies: Thinking about the Federal Reserve while Nursing a Cheap Beer
    by Linh Dinh

    The heart of the matter is that liquidity and credit distribution is being sucked from the middle class and the great shift of power wealth-in-finance under political consolidation is “financed” by printing more money at cross purpose to restoring the middle class and rebuilding the infrastructure. The stupidity of this is that popular intuition is that institutional monetary power is not simply flawed but is outright fraud writ large. Under the basic instinct of distrust and defensive retaliation, Perry types can alarm reactionary fervor into a fever pitch because he is absolutely on target with how the system is being abused…but has targeted the process as opposed to processing.

    Who would gain. What ever happened to follow the money? If they do “print” money they keep it to themselves and it is carefully managed within elite subsystems. If they do not print money for any growth and liquidity purposes we will surely see great desperation in America and a violent policing system bought to suppress it that will appear normal as it is orchestrated into the circumstantial parameters of everyday justifications. The upper tier will dominate in either case.

    Of course America has really never been tested under current “dependency” levels of redistribution. No one is going to be living off of roof top organic gardens very long. Elites are, it seems, too busy scrambling for personal power position to accept the realities that they may potentially evoke or provoke. The concerted game plan is mutual gain among the “me” economy, but the “ME-conomy” of power may well shoot itself in the foot out of self interest in the process.

  45. @ James Kwak,

    Oh, honey, I washed dishes and I’m now making “A Foray into Monetary Policy and Tangentially Related Speculations,” for you know I’m a “policy wonk.”

    Your own quotes are their own emetic.

    No, sorry, James you’re not a policy wonk. You’re a guy who wrote a book with a real policy wonk, Simon Johnson, (remember him?).

    It’s clear that post after post suggest that you may have cracked a book, but you know next to nothing about how markets and government interventions really work.

  46. A Voice in the Wilderness

    @ Diogenes, give it a rest, Kwak is your superior, and it galls you.

  47. @Bruce

    Ah yes, turning Mother Russia into Sister Slut….Must be that tragic slavic meloncholy – when Zhivago returns home to find it filled with strangers who are now living there and his family shoved into a few rooms – do you get the sense that the strangers who moved in are finally not miserable because they live in the doctor’s house?

    A thriving middle class in USA – earned through HONEST work – sort of throws the whole “there will always be great inequality” belief out the window…

    The blather about patent rights – guess they can’t quite figure out how to pretend they own the key patents filed in the 1970s that would have had USA not needing ANY foreign oil by now…Demolishing the fire wall between *inwestors* and *savers* burnt down the house….

  48. @ A voice,

    Hi James,

    How are ya?

  49. A Voice in the Wilderness

    @ Dio, I am not James, but you are putrid flesh with a throbbing conceit, and an equal measure of jealousy……once again, realize you will never attain the achieved status of someone like Kwak, so b*gger off, got it?

  50. What is it about your blog that attracts the loopest commentors of any of the economics blogs. You make some interesting arguments, but only a few really engage you, with most just wandering around in their mental gardens. Annie are you sincerely convinced anyone even reads those long polemics. I mean even 1 person would make it worth it.

  51. cutting and pasting:

    “…..39. We shall so hedge about our system of accounting that neither the ruler nor the most insignificant public servant will be in a position to divert even the smallest sum from its destination without detection or to direct it in another direction except that which will be once fixed in a definite plan of action. (Is this why a “private corporation,” known as the “Internal Revenue Service,” is in charge of collecting the “payments” of the “Income Taxes” and the IRS always deposits those “payments” to the Federal Reserve bank and never to the Treasury of the United States??)…”

    Burn the Patriot Act