The Smugness of Unintended Consequences

By James Kwak

After my post on Corey Robin’s new book, a friend recommended Albert O. Hirschman’s Rhetoric of Reaction. As the title suggests, the book is about the rhetorical style of conservative thought dating back to Burke. Hirschman identifies three common tropes: perversity (that great-sounding progressive idea you have will have the opposite of its intended effect), futility (that great-sounding progressive idea won’t change anything, because you don’t understand the fundamental laws of the world), and jeopardy (that great-sounding progressive idea will destroy some other thing that we all agree is valuable, making everyone worse off in the end). Hirschman doesn’t dwell on this specific point, but it’s obvious that, similar to the argument Robin makes, these rhetorical devices can only exist in opposition to some progressive reform movement.

I thought the description of the contemporary form of the perversity thesis (e.g., welfare programs create poverty) was especially good. “Here the failure of foresight of ordinary human actors is well-nigh total as their actions are shown to produce precisely the opposite of what was intended; the social scientists analyzing the perverse effect, on the other hand, experience a great feeling of superiority—and revel in it” (Belknap Press, 1991, p. 36). This seems to me an accurate description of why the Economics 101 ideology is so powerful. People get a sense of superiority from owning counter-intuitive theoretical insights—even if those insights are wrong.

For example, Economics 101 was all over the health care reform debate, arguing that if we make people pay more for their marginal health care, they will consume less and our cost problem will be solved. But it doesn’t work that way in real life. Atul Gawande wrote an article describing how higher co-pays reduced spending for most employees, but increased it significantly for the most expensive employees. The solution, according to the people profiled in his article, is to give the highest-consuming people more primary health care, which reduces the amount of catastrophic care they need.

Then there’s Frank Easterbrook, the king of Economics 101, asserting in Jones v. Harris Associates that there’s no way that people can be paying excessive mutual fund fees because market prices are set by sophisticated investors (and citing a purely theoretical law review article).

But as a cocktail party debating point, nothing beats “If you make people pay more to see the doctor, they’ll see the doctor less”—which is even better when backed up by a pair of supply and demand curves on a napkin.

This isn’t a criticism of economics in general. As I’ve noted before, people with Ph.D.’s in economics tend to be less doctrinaire about Economics 101 principles than undergraduate economics majors. It’s a criticism of how facile economic logic gets used in public debate.

49 thoughts on “The Smugness of Unintended Consequences

  1. “Facile economic logic”? You mean like assuming exponential real GDP growth until the end of time and thus concluding that perpetual trillion-dollar deficits are not a problem?

    Just as a hypothetical example.

  2. I think he means more of the ideology that tax cuts actually create growth…. Perfect example of horrid econ 101 logic.

  3. Nemo:
    Yes, Inflation keeps the focus on society on the now and future, not the past. it is supposed to happen no matter what advances in the society makes, hamburgers are hamburgers despite over the last hundred years they have gotten more expensive in real terms. This logic you displayed is the example of facile economic logic.

  4. Thanks, Mr. Kwak, for explaining why there are periodic revolutions sparked by human labor. Those revolutions put a time limit on how long a “rhetorical device” is allowed to rule as a replacement for a successful government.

  5. The other reason that the health care/econ ideology persists is that people (Americans who tend to be mostly healthy), regard health care as exactly like a consumer good or a utility where charges can moderate consumption (for example, charge for electricity so people will turn off lights when they leave a room). But health care is very different from consumer goods. In reality, no one is going to ask for a bone marrow transplant unless they’re desperately ill. So there really won’t be a run on bone marrow transplants—or appendectomies—because the procedures are so awful to experience (and not just expensive) that they’re only utilized when necessary or potentially necessary You never hear of anyone seeking abdominal surgery to remove their appendix just because insurance covered it. But other parts of health care, such as diagnostic imaging, are inconvenient for patients but mostly not troublesome experiences. So if a doctor says ‘You need a scan’, then the patient says ‘I need a scan’ and the covered patient goes forth and puts the fees in motion—frequently, expensively, and often uselessly in American health care.

    Despite billboard advertising, patients genuinely cannot control their own health care because that’s why they go to doctors in the first place—doctors went to med school, they passed the boards, and that’s why they diagnose and direct treatment. The patient need not be passive, but the areas for legitimate control are very very narrow. And very sick patients who think they can evaluate their surgical procedure in the same way as shopping for a new refrigerator, are either not that sick or they are at risk for delaying and therefore impairing their own care. It’s very interesting to talk about this among people from other countries with universal health care. They don’t have that particular ideology and so look at you (well, me since this happened recently) as if Americans are not yet certain about clean water being a good idea.

    Ideologies are very interesting. It can be hard to differentiate since everyone is likely swept up in some kind of ideology that’s actually functional in some way. But seeing an ideology for what it is can make so many other things make so much more sense.

  6. Please write about my home town, Flint, Michigan, Mr. Kwak. An example of liberal policies, over a time continuum.

    Start with the time when benefactor CS Mott and the Mott Foundation gave so much to the city, including cheap
    classes. Ah, probably 30 pages of possibilities! Can’t find what you want? Find five friends who will study with you
    and we will find you a teacher.

    When the Flint Campus of the University of Michigan was created, so people could move beyond the beautiful junior
    college, to further education, easily…. The Bower Theatre. The awesome public library. The lone planetarium in many hundreds of miles.

    When General Motors Institute had a five year work/study program to create the best engineers.

    When the unions reigned king and the workers demanded more money for bigger boats and campers to haul, each weekend, “up north.” Like lemmings. In competition with each other for more more more “things.”

    And, examine how these folk are now, today, pulling together to save the city…? What did the gifts of so many buy the world and humankind?

    These former union folk still entitled to more and better and will take it, now, if need be. These folk who push my aged mother aside in food checkout lines because they are “busy.” (And will give you “the finger” about three times for each hour of driving because…. well, because.)

    (Detroit is, of course, another possible object lesson, but Flint’s better, I think, because of the abundance of
    benefactor possibilities it once had, the beauty, and the great paying union jobs, integration.)

    Did society “grow” the people who, today, kill, rob, burglarize, rape, and mug people? Or, was it “in them” at birth?
    Will they stop burning houses and trashing the streets and dealing drugs if we pass universal health care and give
    them more food stamps? Can we buy them off now? Did we create them? What will work, going forward?

    Flint, Michigan would be a good look at a city over time to examine the possibilities of social policies that work
    and don’t work. Test your theories. ….Lady in Red

  7. Actually, possibility a person such as yourself might look at Flint and Detroit, in tandem.

    I’ve just read, today, the “occupy” movement is moving to Detroit:

    By Paul Kersey, Mackinac Center For Public Policy

    Occupy Detroit? How About Accepting Responsibility for Detroit?

    Inspired by protests that started in New York and proliferated around the country, activists are preparing to “occupy Detroit,” with a downtown rally set for this afternoon.

    Aside from the tragicomic imagery of activists occupying an increasingly unoccupied city, there’s the question of just what the “Occupation” movement, a vague grouping to begin with, would want to change about governance in the city. Over the last 40 years, the city has been governed by a political machine that is Democratic in all but name.

    Union membership is well above average and organized labor is overwhelmingly powerful in city politics. If corporations are the occupiers’ main adversary, then Detroit is admirably free of corporate influence: According to Crain’s Detroit Business, the city’s seven largest employers are government agencies or nonprofits, rather than profit-making corporations.

    Even Dave Bing, for all his business experience, is inclined to dabble in the sort of governmental planning — witness his ideas for consolidating neighborhoods — that progressives are fond of.

    And somehow, in spite of all that, the city’s population has plummeted to less than half it was during its heyday.

    And now left-of-center groups plan on “occupying” Detroit. Is it possible they’ll start accepting some of the responsibility for it?

    Paul Kersey is the director of Labor Policy for The Mackinac Center for Public Policy. He blogs from a conservative perspective for CBS Detroit.

  8. Lady in Red,
    You wouldn’t suppose the decline in Flint has just a tiny bit to do with the decline in labor force of the auto industry to 10% of of levels that existed 30 years ago, do you? Poverty has a tendency to have a negative effect on cities, and a massive loss of decent jobs tends to lead to poverty.

    Lesson noted. Holy cripes! We better address this unemployment issue before the rest of the country becomes like Detroit and Flint. Call everyone you know to come out and support the OWS protests!

  9. Yes, LucyLula, I would. But why did that trash so vastly rich a community? At its zenith, were the workers
    hard-working, happy, loyal, productive, creative, appreciative of all the community had to offer? Were they
    thankful for the full health benefits — and big pensions?

    Or, was a mentality cultivated that was rooted in entitlement, greed, envy, materialism?

    Why do so many much poorer communities pull together through times like this?

    Why is Flint the crime capital of the US?

    The question, simply, is why did all that was available not make this community cohere? How many jobs, how
    many food stamps and other govt goodies are they “entitled” to?

    And, of course, when might we run out of “other people’s money?” ….Lady in Red

    PS: I’m no friend of the banksters, btw. I think there should be a massive world default. Damn Goldman Sach
    to hell. But, the govt is in collusion with the banksters. So, you got to hit the problem from the OWS end as
    well as the tea party end. They are playing a game. And, if you believe “I’m from the govt and I’m here to help
    you” you are a fool. The govt is not here to “provide jobs” or to protect you from pollutants and bad meat. It is
    a bunch of parasitical mediocre folk here to feather their own nests — at your expense. Dump the kool-aid!

  10. Yes, but let us also not forget about the all the ignored counterintuitive truths ignored for instance by smug regulators.

    The regulators held, and still hold, that the higher the ex-ante perceived risk of default of a borrower is, the higher should the bank equity be and vice-versa… sounds about right eh?

    But, it is only the lending to those who are perceived ex-ante as having a low risk of default that can reach such level of exposure that it constitutes a systemic threat, and it is only what has ex-ante been perceived as having a low risk of default that carries with it, by definition, the potential to bring us huge unexpected and unpleasant surprises… and so in fact capital requirements for banks that are higher when the risk of default is perceived as nil would make more regulatory sense.

    And yet, here we have two professional, Simon Johnson and James Kwak, with a blog dedicated to the financial crisis, and a book written about it, that refuse to acknowledge the monstrous mistake made by the regulators… and I do not know why.

    Sometimes those not cooperating for the real truth to come out, do so because they are engaged in selling their own truths as this is more convenient for them.

    Just think about what those in Wall Street could be saying if they knew what they were talking about… They could be asking for capital requirements based on job creation ratings, because, if as tax payers we are to be the ultimate pick-uppers of bank crises, then we should at least be certain that the purpose of the banks is acceptable to us.

    Right now, the only purpose for the banks that the regulators have defined, de-facto, by means of some ridiculous low capital requirements for what is ex-ante perceived as not risky, is for banks to have profits… and that seems a bit vulgar, to say the least.

  11. assuming exponential real GDP growth until the end of time and thus concluding that perpetual trillion-dollar deficits are not a problem

    Government liabilities are somebody’s assets, so all the deficit does is redistribute future economic output. It may be bad (e.g., if those assets are owned by people you don’t like very much like wealthy foreigners); but it may also be good (e.g., if those assets are owned by people you sympathize with like the poor). Deficits are bad if they are wasted (e.g., Greece) and good if they help the economy grow (e.g., the US in early 1930s).

    That’s why the economists’ favorite answer is “it depends”.

  12. “Poverty has a tendency to have a negative effect on cities, and a massive loss of decent jobs tends to lead to poverty.”

    “why did that trash so vastly rich a community?”

    Somebody here isn’t connecting the dots.

  13. Lady in Red wrote: Why do so many much poorer communities pull together through times like this?

    I’m not familiar with Flint and the people that live there specifically but can make an educated guess, based on my knowledge of human behavior, including having read about the Great Depression. Simply, it sounds like the people of Flint have given up hope. Its the same as in a marriage, hope is the critical factor that determines the end work towards saving a marriage. As long as there is still hope, a couple will stick together and try to come up with solutions. Once they lose hope the marriage can be saved, they stop trying.

    I suspect the people of Flint no longer see any prospects for a brighter future. Do you think this is a city of evil and corrupt people? Is there something in the drinking water there that makes them this way? Or perhaps they are angry and disillusioned at seeing the American dream having slipped forever from their grasp? I’d bet they would much prefer to be working and paid a decent wage than to be collecting food stamps. It’s not a life of leisure and luxury, trust me. It’s not what they wanted for themselves and certainly not what they want for their children. Try talking to some of these people some time. You might gain a new perspective.

    P.S. I’m a nurse. You see, being white and having a college degree, its a whole lot easier to find a decent job. And it so happens I’ve worked in community health with the poor, those on entitlement programs. Most are lucky if they have a GED, which doesn’t get you very far anymore.

  14. LucyLulu….. My twitching elbow tells me you are naive and wrong, but I don’t know. I do know that when I lived here, in Flint, and times were flush there was a sense of entitlement — not appreciation.

    There was no interest in anything beyond material competition with neighbors for more, bigger….. something. Poor black kids could easily get college support from Mott Foundation. Hell: Mott was a primary force in getting the Flint College of the U of M there so that the poor (who were *not* poor at all by today’s standards) could most easily learn, advance.

    Flint has been destroyed. Yep. Google for pictures of the neighborhoods. Worse than Detroit.

    My mother “barks” and “growls” at the predators coming up the drive to see if anyone is home. The elderly are often mugged and murdered. (Nah: I can’t get Momsy out…. “This is home.”)

    Your assumption is: if we throw them some more bones, all will be well. I question that assumption.

    I don’t know the answers, but the data is there to be studied, and it is not a simplistic easy case for more govt largesse (which, as I wrote, is faux largesse, in my opinion; simply the govt creating more bureaucracy to feather its own nests and creep ever bigger, not to care for people at all)

    I was troubled by the title of James’ essay: The Smugness of Unintended Consequences.

    If full employment and healthcare and fat pensions for all is where we should aim, what in God’s name, is the
    monster that is created if you stop feeding it? Is this what society should strive for? Is this what James hopes
    to achieve for society, at large: a nation of folk with the natures and the tendencies of the people of Flint, Michigan when not “fed” to “entitled” satiation?

    If James believes that those who question his ideas and solutions are merely smug, the answer to Flint Michigan
    should be easy for him. ….Lady in Red

  15. “Poverty has a tendency to have a negative effect on cities, and a massive loss of decent jobs tends to lead to poverty.”

    “why did that trash so vastly rich a community?”

    Somebody here isn’t connecting the dots.

    Cute, succotash :-)

    And correct, we still have the basic math problem. And GenX sociopaths as *managers* everywhere…

    Flint and Detroit are easy to explain – as I see it. Corporate adopted a business model that was designed to maximize profit at the expense of product improvement. Only Boone Pickens has been honoring the energy plan agreed to among gentlemen in the 1970s since the 1970s when they agreed to it and that’s why he is finally getting it done – a decade behind schedule because the rest of the gentlemen who shook on it invaded Iraq instead….

    I would like Lady in Red to explain what the difference is between corporate charity and government service jobs. Corporate should have been distributing profit through the wages of labor – not taking so much from them that they (labor) did not have enough time or money to take care of being involved in their own local self-governing – schools, hospitals, infrastructure…people used to work 12 hour shifts in steel mills and still got together to build churches and schools and hospitals with their own hands. Banksters, Carnegie in the case of Trenton NJ, went psycho on those astonishingly productive and intelligent immigrant communities the last time, also, causing the Great Depression. The money-lender cult is vicious – look at thousands of years of Western Civilization with the same pattern repeated! They destroy the wealth of the people wherever they set up shop. It’s sickening, really. And it was CRIMINAL to pull the same schtick after the passage of Glass-Steagel. It’s all Psycho Heaven now with that *law* is GONE.

    @MB – Great post! Just one thing, there are *consumer* medical products that everyone will need to partake of in a lifetime besides clean water and fresh air and variety in food availability. Bacteria and virus are a real perpetual war – humans will always have them on our tail – the sun shines on the wicked and the just :-) And there’s lots of needs for dentistry, people like eyeglasses, bones can break, and what about car/boat/plane/train accidents – yikes, costly stuff there to life and limb. The genesis of the sadistic approach to health care in the USA keeps getting buried as it keeps doing the same thing – experimenting with us for the $$$. Health care and medical research are in the hands of a very LOST group of insider power players. It’s urgent to start stopping the collateral damage – can’t ship the *manufacturing* of any of those *products* overseas – we must supply our own needs locally or it will not be sustainable – look at the increase in shortages already!

  16. “Corporate adopted a business model that was designed to maximize profit at the expense of product improvement.”

    Yup. The failure/refusal of the car industry’s top brass to have any original ideas about cars over a 40 year period might have a little something to do with the decline of Detroit, Flint, etc..
    Of course I fully realize that in making this statement I’m attempting to connect an economic development with social and cultural changes, as bizarre as that may sound to some of us.

  17. Nemo said,

    ““Facile economic logic”? You mean like assuming exponential real GDP growth until the end of time and thus concluding that perpetual trillion-dollar deficits are not a problem?”

    Notice how Nemo moves from “exponential GDP growth” to “trillion dollar deficits.” Perpetual trillion dollar deficits are not exponential. They are not even straight line. Considering the Fed’s 3% inflation target, trillion dollar deficits until the end of time would cause reduced GDP growth until the end of time.

    It would be helpful for all to understand Monetary Sovereignty. (

    Since the world of economics changed in 1971, how has popular wisdom changed? Not at all. Most economists still advise leeches to cure anemia.

    Rodger Malcolm Mitchell

  18. MrM said, “Government liabilities are somebody’s assets, so all the deficit does is redistribute future economic output. “

    He is correct about federal liabilities being somebodies assets. In fact, perhaps the single most powerful equation in all of economics is: Federal deficits – Trade Deficits = Private Saving

    But in a Monetarily Sovereign nation (, which by definition does not need to tax, there is no redistribution. There is only distribution. Because deficits are the excess of spending over taxing, no one pays for deficits, now or later.

    MrM’s comment would be correct, however, for monetarily non-sovereign nations like the PIIGS.

    Rodger Malcolm Mitchell

  19. Lady In Red;

    2 questions.

    1. “I do know that when I lived here, in Flint, and times were flush there was a sense of entitlement — not appreciation.” Did that sense of entitlement differ from the current sense of entitlement in the finance industry in New York?

    2. “Poor black kids could easily get college support from Mott Foundation.” What is the significance of the word “black” here? Are you saying that poor White kids could NOT get the same support?

  20. @ Because deficits are the excess of spending over taxing, no one pays for deficits, now or later.

    Ahh but yes they do Rodge. In the form of higher prices for commodtiies of all types. Gvts answer to supply and demand of these is to inflate the currency when its supply is low and increase the price when the demand is high. Our biggest concern was gas in the 70’s, So we invented new financial usury laws to take advantage financially of a number of industries and created a hugh war machine that was funded and built by Americans. Today, with the greater separation of the once middle class growing expodentially, we have educated enough people to know when their elders and politicians have done them wrong. And it is beliefs and views such as yours that bring the animal out in them and drive them to sleep in dirty city streets day and nite. They are paying now and will later. They just want they same to happen to you one day, and it very well may.

  21. Ozajh…. Two answers:

    1. In the Flint heyday, the workers had all they needed — good working conditions, big salaries, controlled jobs (not allowed to be asked to do something not in job description) full health benefits, and large pensions (all of which exceeded that of my father who was a PhD at GMI). I never had a sense (and I know that is not scientific) there was any appreciation whatsoever. They bought “things” and “went up north.” No theatre, library,classes, etc. There was a sense of entitlement that they deserved even more.

    The kids today DO have a problem: they don’t have jobs and have loans to pay off.

    My question was how did the sense of worker entitlement morph into rape, robbery and murder today? Perhaps there is no connection whatsoever.

    2. My only point in mentioning “black” is that, often, the assumption is that poor blacks, because of racism, are denied things available to poor whites. That wasn’t the case in Flint. And, yep, poor whites got help, also. I was one. Even with my working in college, Dad struggled on a $20K/year salary to pay college costs as well as supporting the rest of our family.

    This may not appear. I seem to have been “moderated” out of this blog, which, I guess, belongs solely to those who identify with James’ assumptions about the world. …..Lady in Red

  22. Owen,

    I think you’re talking about the “printing-money-causes-inflation” myth. It’s based on the correct formula: Value = Demand/Supply. Unfortunately, most people think Value = 1/Supply, forgetting all about Demand.

    The Fed has a target inflation rate of about 3%, and controls inflation by increasing Demand, i.e. by increasing interest rates. That is why, for at least 40 years, there has been no relationship between federal deficits and inflation. See:

    As with so much in economics, this is counter-intuitive, but those are the facts.

    Rodger Malcolm Mitchell

  23. “My question was how did the sense of worker entitlement morph into rape, robbery and murder today? Perhaps there is no connection whatsoever.”

    You need to let some economic and social facts hold a mass meeting.
    Or is the prospect of that too frightening?

  24. @succotash – “Of course I fully realize that in making this statement I’m attempting to connect an economic development with social and cultural changes, as bizarre as that may sound to some of us.”

    C’mon – there’s only ONE math formula in place:

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

    Or the more common variation, “Privatize the profits, socialize the losses”.

    Trying to “socialize the losses” from wanton military adventurism on a planet with 7 billion people needing commodities….? I don’t believe in a *god* that created a *hell*. Clearly, *hell* is man’s creation.

    I do believe that the will of man is a stronger physical force that the flapping of a butterfly’s wing. Get enough psychos and sociopaths together to mentally masturbate about infinite profit taking…..? An undiscovered circle of hell….

  25. Let me describe, for the umpteenth time, the mother of all “Privatize the profits, socialize the losses” schemes…

    Allow bank lending to what is perceived as “not-risky” to be carried out against almost no bank equity, which means banks can leverage their capital a monstrosity of times when earning the interest spreads paid by those perceived as not-risky, and therefore earn monstrously large private profits, until that time when those ex-ante perceived as not-risky have been lent those monstrous amounts by the banks they are doomed to be lent, and all the resulting losses are socialized, explicitly or implicitly.

  26. No, your formula is a myth. Real (or percieved) value is in the eye of the owner or beholder. I don’t mind paying to keep a bmw on the road because I made a fat wage off of some gvt contract. Or I do mind paying too much for gas because my jeep needs work each week. Where as actual value is I don’t mind paying extra for gas because my car never breaks down and provides me with all the needs I require. Financial formulas are just and only that. They have no basis in fact because of a hugh underground economy and because financial gambleing laws created by the same people who benifit from such laws and don’t take into account the masses. Turbo Timmy and Hank Paulson come to mind when needing to create or influnce people by new laws, or new facts.

  27. @Per

    I said this, “Corporate adopted a business model that was designed to maximize profit at the expense of product improvement.”

    And succotash said this, ““Of course I fully realize that in making this statement I’m attempting to connect an economic development with social and cultural changes, as bizarre as that may sound to some of us.”

    All Basel did was put the nail in the coffin of *innovation* by writing *laws* protecting what is in their mountain storage units – gold, jewels, cash, etc. Of course people (Swiss) with such a narrow agenda would be incapable of steering a global economy! At least they used to be diplomatic about it – calling it *storage* and not screeming “it’s all mine mine mine!” in public.

    The fully funded rise of the new criminal cash-rich *middle class* in America is producing *leadership* from that class – we have a sitting President who NEVER had a regular-joe job and even dabbled for a while in ‘hood street commerce and who is willing to say stuff like, “Not everyone deserves to own a home” from the bully pulpit of POTUS.

  28. “it’s obvious that, similar to the argument Robin makes, these rhetorical devices can only exist in opposition to some progressive reform movement.”

    Nonsense – as we’re seeing now, they can also be used in a purely reactionary fashion to attack long-settled issues that were *once* products of a progressive reform movement. See also the GOP “we don’t need no minimum wage, child labor laws, or food safety regulations” position.

  29. Not so true, I actually advocated abolishment of the Fed in the past. And let the congress handle the money issue, that is, after they are able to do their own taxes, to simplify the taxes of the middle class and others. It eliminates alot o careers, but many of those have abusive powers and should be eliminated anyhoos. Perhaps yours?

    First the laws need to be straight, (a balance the budget admendment for one) if that won’t be done then consequences should arise from the behavior of laws on the wrong side of nature. We have a whole slue of those laws, having been and continue to be, ignored.

  30. Owen, a balanced budget amendment would be a national disaster, and guarantee a depression. To understand why, learn about Monetary Sovereignty at:

    Those who do not understand Monetary Sovereignty do not understand economics.

    Also, perhaps you could answer the question at:

  31. Perhaps there is no answer for your situtation, so no answer could possibly be right for you and/or your followers. I instead look toward your youth as more the problem, rather than the/a solution. It shows you are vulnerable, in danger, and in trouble. Can you explain to me why you are not?

  32. Lady In Red,

    Answers noted.

    (I’m in a different time zone, hence the long delay in replying.)

  33. It might be clear in your mind grasshopper, but until the day of judgement (about one day after the queen removes her first nail with me) nothing is truely answered as far as I am concerned.

  34. Wow…..Rodger …… I think you need to look at some basic principles.
    If two tribes trade fur for flint once a year … then the additional fur and flint that each tribe now has is wealth. If that wealth is represented by each tribe having a dollar or each tribe having a trillion dollars the wealth is the same.

  35. Print, Baby, Print!… Don’t worry those who understand “Monetary Sovereignty” guarantee us there are no unintended consequences… except perhaps running out of paper.

  36. Per Kurowski is talking about the “deficits-cause-inflation” myth :

    1. Despite all the so-called “printing,” the biggest worry today is not inflation, but deflation.

    2. Since I971, when the U.S. became Monetarily Sovereign, there has been zero correlation between federal deficit spending and inflation (

    3. How does a tax increase or spending decrease reduce unemployment or grow the economy?

    Rodger Malcolm Mitchell

  37. Per Kurowski is talking about the “deficits-cause-inflation” myth:

    I am not talking about any “deficits-cause-inflation” myth. What I am talking about though is that before you water you need the land to have been prepared so as to receive the water, so that it can grow something that needs the water… otherwise you will only flood a paved parking lot.

    To “Print Baby Print” before that is just stupidly throwing away some opportunities that you might never have again.

  38. Per,

    Who said anything about wasting resources? That’s your straw man. Monetary Sovereignty merely says the federal government has the unlimited ability to pay any bill of any size, any time. How about the unintended consequences of Tea/Republican party, cut-federal-deficit beliefs?

    In that connection, how does a tax increase or spending decrease reduce unemployment or grow the economy? i never have met a debt-hawk willing to answer that question.

    Really sad.

  39. Per, of course it matters. There are some expenditures that will grow the economy faster or reduce unemployment sooner or improve education better, etc., etc., etc.

    That said, all domestic federal deficit spending benefits the economy by putting money in the pockets of Americans, who then spend it according to their desires. Foreign domestic spending becomes a trade deficit, and is part of the equation: Federal Deficits – Trade Deficits = Private Savings.

    Again, how does a tax increase or spending decrease reduce unemployment or grow the economy?

    Rodger Malcolm Mitchell

  40. Monetary sovereignty is only effective when the currency is STABLE. A supply and demand where the supply has a limit. The golden rule comes to mind when determining limits.

    During the revolutionary war the British flooded the US with counterfit currency to the tune of ten times. This made the American money supply vunerable to other forms of wealth, like silver and gold. Today has similarly compounded problems with the creation of so called wealth by the establishment and the ability of counterfitters to create their own wealth. Across the nation people are bleaching $5 bills white, and then using a commen printer to make that a $100 bill. The cashier lady or gentlemen then quickly swipes the bill with a pen an wah la, a sale is made. This causes PRICE inflation during a time of middle class monetary deflation, so in reality the currency is being weaken from all sides. This unlimited currency war eventually collapses when a more stable replacement arrives to take its place, but this is a percieved view so until the actual collapse is it just a myth, after the collapse it is a fact.

    @ Again, how does a tax increase or spending decrease reduce unemployment or grow the economy?

    You have choosen a means to an end for debate, reduce unemployment or grow the economy. Its like religion, it has no end, you always want to reduce unemployment no matter the numbers, you always want to grow the economy because it puts money in peoples pockets. The better method is to increase the quality of life for people so they can be more productive over the course of a lifetime. Its been proved (sources not available) that the harder you work, the sooner you die. Gearing the country to better withstand human mechanical breakdown will lead to healthier citizens that require less of a burdon for their offspring to care for(if any burdon at all). Our health care system is wired to poison the homosapian and then spend money for a cure. So my point is whats the sense in chooseing a bad path and then running in circles asking for others to come up with a solution. If every person in America came down with an ailment that needed an expensive treatment the GDP would soar, while the overall condition of its citizens would not have improved, what’s the benifit of that. Just as what is the overall benifit, besides putting a vunerable currency into people pockets, of needing to reduce unemployment. In college (when you have the least amount of money during a lifetime) a floormate coined the phrase “Times of marijuanna and no money are better than times of money, with no marijuanna.” So to simply believe that things will feel better for you, just because the unemployment rate is reduced for others, is a bit like believeing money is your god as you can’t stop waking in pain. But the Mr. feel good green back and cocaine gets me by so all is good of course, until the law man arrives and then it all goes to hell in a hand basket overnite.

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