Wednesday, January 18, 2017

Claire Connelly — Why a universal basic income is a poor substitute for a guaranteed job

Bill Mitchell, Pavlina Tschernva, Fadhel Kaboub, Steven Hail, Ellis Winningham.

Buffer stock of employed versus a buffer stock of unemployed.

Bill Mitchell:
Article on Job Guarantee versus Basic Income Guarantee
The ABC published an article that I had some input into today – Why a universal basic income is a poor substitute for a guaranteed job – by Claire Connelly, a freelance journalist in Australia.
It generally makes all the relevant points and is worth reading and spreading.
ABC (Australia) — Opinion
Why a universal basic income is a poor substitute for a guaranteed job
Claire Connelly
ht Bill Mitchell at billyblog

Debate: Can China Survive Trump? — Michael Pettis and Tom Orlick

Orlik: President-elect Donald Trump's talk of tariffs and the rise of populist nationalism evident in the Brexit vote are warning signs of a coming storm. At this point, though, there's no way of knowing how severe the storm will be. The history of U.S.-China relations shows tough talk on the campaign trail rarely translates into action in office.
Trump has already backed away from other pledges. It's possible tariffs won't materialize. Indeed, a fiscal stimulus that puts more money into American shoppers' pockets could actually boost demand for China's exports. In Europe, anger is focused more on immigrants than trade. Absent sweeping tariffs, our forecast is for exports to grow about 5 percent in 2017, reversing the contraction in 2016.
Pettis: You may be right, Tom, but the global economy continues to be distorted by huge trade imbalances. The worst offender is Germany, whose record-breaking surpluses just keep growing. Meanwhile, Japan is running large surpluses again after five years of deficits. These and other large surpluses are driven not by rising productivity, but rather by structurally weak domestic demand, and in most cases, this weak demand isn't being addressed except by being exported. China is one of the few surplus countries that has actually improved domestic demand, driving its current account surplus down from 10.1 percent of GDP in 2007 to under 3 percent today. In absolute terms, however, China's surplus is barely 10 percent below its previous peak.
The problem is not China as a US competitor, but rather US "partners" Germany and Japan.

Seeking Alpha
Debate: Can China Survive Trump?
Michael Pettis and Tom Orlick

Janet Yellen — The Goals of Monetary Policy and How We Pursue Them

Board of Governors of the Federal Reserve System

Chair Janet L. Yellen

At the Commonwealth Club, San Francisco, California

January 18, 2017

Enrico Braun — Putin: Fake News Writers Worse Than Prostitutes - Trump Doesn't Need Either

At the risk of being politically incorrect:
Basically, Putin says, Donald Trump had the opportunity to bang any woman he wanted at Miss Universe - what the heck would he need with a prostitute? Although naturally, Russia provides the world's best.…

Hard to argue with such brutally flawless logic. And it's just like something Trump himself might have said.
Somebody remind me how Putin and Trump end up NOT getting along again?
Russia Insider
Putin: Fake News Writers Worse Than Prostitutes - Trump Doesn't Need Either
Enrico Braun

My Davos rant. Davos sucks! Somebody drop a bomb on that place.Please!

Paul Grenier — Legitimate Differences — A new approach to Russia

According to the outlook that might be described as the democracy-idealism/neoconservative-interventionist school, the only way to achieve a lasting settlement is for Russia to cease being what it is at the moment and to become instead much more like the United States. Russia should become a liberal democracy. Only then—because, as many Wilsonian idealists have argued, “liberal democracies don’t fight one another”—can the relationship be stabilized for the long term.

The theory is not entirely implausible. There are indeed forces within Russia that strongly identify with American liberal democratic values. American diplomats and journalists frequently run into people who hold such sentiments. They pop up among one’s well-traveled Russian-intelligentsia friends and are widely quoted in the articles written by prominent journalists who happen to be imbued themselves with the Wilsonian sensibility.

The problem with this line of thought—aside from the impossibility of imposing it from the outside—is that the Russian version of liberal democracy differs fundamentally from the American version.
The fact is that Russia today is already in many ways liberal. But its liberalism is of a peculiarly Russian sort. It does not deny rights and freedom, but it grounds them not negatively (in terms of what government shall not do), as does the Enlightenment liberalism of Locke and Hobbes, but rather in terms of Eastern Christianity’s image of what man is. As a result, there is no Russian liberalism, or Russian politics of any other sort—including its standard semi-authoritarianism—that separates the state from religion in the way that the United States does today.
An authentically Russian liberalism, in other words, is hardly less starkly different from our secular, liberationist order than is Russia’s present political arrangement under Vladimir Putin. The fact is that there simply is not available to Russia a political order that is aligned with the present-day American version of secular liberal democracy. Both its history and its mores exclude it. And if we try to impose it anyway, in defiance of Russian history and self-understanding, then we will find ourselves repulsed in the same way Napoleon was. As Henry Kissinger wrote, “No power will submit to a settlement, however well-balanced and however ‘secure,’ which seems totally to deny its vision of itself.”….
The article is well-written and the author is very insightful in comparing and contrasting US and Russian visions and values. Worth reading the whole thing.

Americans tend to project, and this projection makes in difficult to understand others with different histories, visions and values. That sets up a conflict.

The American Conservative
Legitimate Differences — A new approach to Russia
Paul Grenier

Nicolas J S Davies — The ‘Post-Truth’ Mainstream Media

U.S. mainstream media sees itself as the definer of what’s true and what’s “propaganda,” but has gotten lost in a fog of self-delusion and is now the principal purveyor of “post-truth” news, writes Nicolas J S Davies.
Good summary of the relevant information, most of which has been posted here as it happened. The post collects it.

Consortium News
The ‘Post-Truth’ Mainstream Media
Nicolas J S Davies

RT — Lavrov slams "triple standards," names those who REALLY interfered in the US elections

Stating the obvious. 

The US, UK, German and French establishments regularly criticize others for what they do more often and more egregiously. Western liberals feel that they are morally empowered to interfere in others' affairs, while others cannot act reciprocally without violating liberal norms.

Fort Russ
Lavrov slams "triple standards," names those who REALLY interfered in the US elections
RT, translated by J. Arnoldski

Thomas Piketty — Vive le populisme !

Populism is merely a somewhat confused but legitimate response to the feeling of abandonment experienced by the working classes in the advanced countries in the face of globalisation and the rise of inequalities. To construct specific answers to these challenges, we have to build on the most internationalist populist elements – therefore on the radical left – represented here and there by Podemos, Syriza, Sanders or Mélenchon, whatever their limits; otherwise the retreat into nationalism and xenophobia will prevail....
Le Monde — Le Blog de Thomas Piketty
Vive le populisme !Thomas | Professor (directeur d'études) at the École des hautes études en sciences sociales (EHESS), associate chair at the Paris School of Economics, and Centennial professor at the London School of Economics, International Inequalities Institute.

Richard Kochetov — When Going to Bed With Dogs Is News, Getting Up With Fleas Is a Scoop – Here’s the One About Trump’s Bed, Putin’s Bed

A close examination of the "Trump dossier."

Jo Mitchell — Full Reserve Banking: The Wrong Cure for the Wrong Disease

... as Positive Money rightly note, neither the mechanism nor the implications are widely understood. But Positive Money do little to increase public understanding – instead of explaining the issues clearly, they imbue this money creation process with an unnecessary air of mysticism....
Critical Macro Finance
Jo Mitchell | Senior Lecturer, University of the West of England, Bristol
Full Reserve Banking: The Wrong Cure for the Wrong Disease
Jo Mitchell | Senior Lecturer, University of the West of England, Bristol

Brian Romanchuk — Trade And Growth

This article is a brief discussion of the relationship between growth and trade deficits in the United States. The previous two decades saw a marked deterioration in the U.S. trade balance, as depicted in the chart above. As a result, trade acted as a counter-cyclical brake on growth. One interesting property of the current cycle is that the trade deficit has been relatively stable when compared to that experience....
Bond Economics
Trade And Growth
Brian Romanchuk

Bill Mitchell — The (neo-liberal) Third Way infestation continues

“Fresh thinking delivered to your inbox – Subscribe”. That is the message on the home page of Third Way an American think tank (aka conservative propaganda machine) masquerading in the public space as a “centrist think tank”. The problem is that this particular ‘think tank’ does not seem to do much fresh thinking, if thinking at all. According to the Politico article (January 17, 2017) – Democratic Party rethink gets $20 million injection – largely aimed to reestablish the narrative that allowed Bill Clinton and then Barack Obama to be elected as President. In part, this initiative is to head off the likes of Bernie Sanders and Elizabeth Warren (neither who are mounting what I call a fully progressive agenda anyway) and claw back the voters who abandoned the unelectable (my judgement) Hillary Clinton in favour of the (shouldn’t have ever been elected) Donald Trump. The narrative that the Third Way organisation has been engaged in for years is hardly fresh. They attack fiscal deficits and call for retrenchments of pension entitlements and public health care funding, they oppose single payer health care and, thus, favour pumping billions of public funds into private insurance companies who offer inferior services, and are strong advocates of the deeply flawed Trans-Pacific Partnership. There is nothing progressive about this group nor fresh. They are mainstream central and the fact they are spearheading a Democratic Party initiative to win back political support tells me that the Party has learned next to nothing from last November’s Presidential election.
Bill Mitchell – billy blog
The (neo-liberal) Third Way infestation continues
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Tuesday, January 17, 2017

Jason Smith — A good series on macro and microfoundations

This is an interesting post on the philosophy (foundations) of economics based on philosophy (foundations) of science and of social science. It is about criteria. The fundamental criterion that distinguishes science from other forms of speculation is empirical data, making scientific hypotheses testable.

Knowledge is distinguished from belief and opinion through critical thinking that imposes discipline on the thinking process. In science discipline is provided by the requirement for an empirical warrant provided by data rather than only or chiefly a logical pedigree as provided by a theory and model. Unless scientists discipline themselves with data, they risk slipping into baseless speculation and mistaking it for knowledge owing to the elegance of the theory and model (formalism) or normative bias (ideology).

Science is basically the search for regularity in changing phenomena, which requires observation and measurement of phenomena either directly or instrumentally. Otherwise, it is handwaving or persuasion rather than the rigorous application of reasoning to a subject matter.

Information Transfer Economics
A good series on macro and microfoundations
Jason Smith

Larry C. Johnson — Inside the Dossier Smear of Donald Trump

This is an absurd but dangerous document. It is presented with the allure of presenting some insider information about the secret, nefarious activities of Donald Trump. But a careful reading of the material exposes some glaring inconsistencies and oddities.
Another important consideration, one that has been lost in much of the media reporting, is that this is not a “single” document. It is a collection of 16 separate reports, starting on the 20 June 2016 and ending on 13 December 2016. Here is just one of the “oddities”–John McCain supposedly sent a staffer to London to pick up the “Dossier” in November and then turned it over to the FBI on 9 December. How can you give the FBI a report that is dated the “13th of December” on the 9th of December?
That is just one of the problems....
No Quarter
Inside the Dossier Smear of Donald Trump
Larry C. Johnson | CEO and co-founder of BERG Associates, LLC, an international business-consulting firm with expertise combating terrorism and investigating money laundering, formerly Deputy Director in the U.S. State Department’s Office of Counter Terrorism (1989-1993, and CIA operations (1984-1989)

The Democrats and #NeverTrumpers are getting traction with the big lie that Trump is an agent of Vladimir Putin and that Russian intelligence manipulated the election to help Trump. How? By repeating the lie over and over. That’s the problem. If these sore losers were asked to produce facts, sources or evidence then the propaganda meme falls apart.
I am belaboring this point for a very simple reason–senior members of the intelligence community, including Jim Clapper and John Brennan and other senior leaders are engaged in a concerted international effort to discredit and delegitimize Donald Trump as President. If they could have their way, Trump would be forced to step down before taking the oath of office next Friday.
I realize how crazy it sounds to assert such a thing (i.e., that the leaders of our nation’s intelligence services are conspiring and scheming to try to prevent Donald Trump from taking office), but it is true.…
Exactly How Did Russia Swing the Election to Trump?

Sputnik — Putin Sees 'Maidan-Style' Attempts in US to Delegitimize Trump

Russian President Vladimir Putin said that he sees attempts in the United States to "delegitimize" US President-elect Donald Trump using "Maidan-style" methods previously used in Ukraine.

Putin noted that an internal political struggle is underway in the United States despite the fact that the presidential election is over.
"In my opinion, there are several goals, some are obvious. The first is to undermine the legitimacy of the elected president of the United States. Incidentally, in this connection I would like to note that — whether people who do it want it or don't want — they greatly damage US interests." "It seems that they trained for this in Kiev and now are ready to organize a 'Maidan' in Washington not to let Trump assume office," Putin said.
"The second goal is to tie the hands of legs of the newly-elect president related to the implementation of his pre-election campaign's promises to the American people and the international community," he added.
He also said that reports of alleged Russian dossier on Trump are fake as "our security services do not chase every US billionaire."
"These claims are an obvious fake. Trump, when he came to Moscow a few years ago was not a politician. We did not even know about his political ambitions, he was just a businessman, one of the richest men in America. Is someone really thinking that our intelligence agencies are chasing every American billionaire, or what? Of course not! It's just a complete nonsense." Those who ordered the dossier on the US president-elect are "worse than prostitutes," Putin said.
Sputnik International
Putin Sees 'Maidan-Style' Attempts in US to Delegitimize Trump

Veteran Intelligence Professionals for Sanity — A Demand for Russian ‘Hacking’ Proof

MEMORANDUM FOR: President Barack Obama
FROM: Veteran Intelligence Professionals for Sanity (VIPS)
SUBJECT: A Key Issue That Still Needs to be Resolved
Where's the evidence, or is this all inference?

Consortium News
A Demand for Russian ‘Hacking’ Proof

President Xi's speech to Davos

World Economic Forum
President Xi's speech to Davos in full
Xi Jinping, President of the People's Republic of China, Office of the President of the People's Republic of China

William K. Black — The New Democrats’ Addiction to Austerity Will Not Die

I know the Republicans are complete hypocrites about federal deficits and debt. I know their dishonesty and faux deficit and debt hysteria, when a Democrat is president, harms the Nation and the world through the infliction of self-destructive austerity. Austerity’s primary victims are the working class and government social programs for the poor and working class. That means that the Democrats should never mimic the Republicans’ dishonesty, hysteria, and willingness to inflict austerity on the people of America and the world.…
Unfortunately, the New Democrats embraced the economic malpractice of austerity with the passion of a convert. Michael Meeropol, an economist whose work I respect greatly, has rightly chastised me for failing to explain that fiscal austerity produces enormous winners, not just losers, and that this fact helps explain why the economic malpractice of austerity is so common. Austerity is a policy that aids the wealthy and harms the non-wealthy. One of the greatest triumphs of the wealthy is to get vast numbers of the non-wealthy to fail to understand this point. The New Democrats’ passionate support for austerity reflects the interests of its primary donors – Wall Street elites....
New Economic Perspectives
The New Democrats’ Addiction to Austerity Will Not Die
William K. Black | Associate Professor of Economics and Law, UMKC

Glenn Greenwald — Jeremy Corbyn Accused of Being Russian “Collaborator” for Questioning NATO Troop Build-Up on Border

The crazy.
The response to Corbyn’s call for better relations and de-escalation of tensions with Moscow was swift and predictable. The armed forces minister for Britain’s right-wing government, Mike Penning, accused Corbyn of being a collaborator with the Kremlin:
The Intercept
Jeremy Corbyn Accused of Being Russian “Collaborator” for Questioning NATO Troop Build-Up on Border
Glenn Greenwald

Robert Paul Wolff — Mystification

This is a link to download many of Robert Paul Wolff's writings.

Robert Paul Wolff

Dirk Ehnts — Modern Monetary Theory and European Macroeconomics: preview

For those of you who are interested in my book (published with Routledge in 2016) but want to have a look first before buying the hardcover version or the ebook I provide this link to Google Books which shows quite a lot of the pages for free:
econoblog 101
Modern Monetary Theory and European Macroeconomics: preview
Dirk Ehnts | Lecturer at Bard College Berlin

Ramanan — What Is “Crowding Out”?

J.W. Mason has a nice article What Does Crowding Out Even Mean? on his site The Slackwire. I agree with some aspects of it not all.
Let me offer a slightly different (but similar) perspective. First the definition. When an economist—typically a new consensus economist—uses the phrase “crowding out”, he/she means that if government expenditure rises, private expenditure falls without output rising.
That’s it: rising government expenditure will lead to a fall in private expenditure with no positive effect on output according to this. And since new consensus economists also talk of government expenditures as less efficient, it also means that they are saying that real output will fall – a proposition that follows.
But this is a highly unlikely scenario.…
The Case for Concerted Action
What Is “Crowding Out”?
V. Ramanan

Rate Making: How Insurance Premiums Are Set

Here "exposure units" are people. And this number is in the denominator so the larger the 'exposure units' the lower the pure premium.

Pure Premium = Losses / Exposure Units

To get the Pure Premium down, you should determine/willfully seek the highest number of Exposure Units possible.

Rate Making: How Insurance Premiums Are Set

Ryan: "more choices and lower costs"...

By "more choices" he MAY mean 'larger actuarial pools' and by 'lower costs' he MAY mean the resultant 'lower price of premiums".

Monday, January 16, 2017

Richard Vague — Rapid Money Supply Growth Does Not Cause Inflation

Rapid Money Supply Growth Does Not Cause Inflation
Richard Vague, currently managing partner of Gabriel Investments and the chairman of The Governor’s Woods Foundation, a non-profit philanthropic organization. Previously, he was co-founder, Chairman and CEO of Energy Plus, and also co-founder and CEO of two consumer banks, First USA and Juniper Financial

Publisher's blurb:
Current debates about economic crises typically focus on the role that public debt and debt-fueled public spending play in economic growth. This illuminating and provocative work shows that it is the rapid expansion of private rather than public debt that constrains growth and sparks economic calamities like the financial crisis of 2008.
Relying on the findings of a team of economists, credit expert Richard Vague argues that the Great Depression of the 1930s, the economic collapse of the past decade, and many other sharp downturns around the world were all preceded by a spike in privately held debt. Vague presents an algorithm for predicting crises and argues that China may soon face disaster. Since American debt levels have not declined significantly since 2008, Vague believes that economic growth in the United States will suffer unless banks embrace a policy of debt restructuring.
All informed citizens, but especially those interested in economic policy and history, will want to contend with Vague's distressing arguments and evidence.

George Eliason — Indict Clinton For the Russian DNC Hack

More on the Ukrainian connection. For previous posts on this, search on "George Eliason" on this blog.

The Ukrainian connection actually extends far beyond the alleged Russian hacking. Ukrainian views including Ukrainian intel services have been stovepiped into US policy making since the Maidan coup d'etat.

Washington's Blog
Indict Clinton For the Russian DNC Hack
George Eliason

RIA Novosti — The Art of No Deal: Putin says 'no' to Trump's nukes for sanctions offer

Moscow will not consider reducing nuclear weapons in exchange for the US lifting sanctions. This has been stated by the Russian president’s press secretary, Dmitry Peskov.
Russia has already said previously it will not negotiate over sanctions. Door open for negotiation on nuclear disarmament after inauguration.

Fort Russ
The Art of No Deal: Putin says 'no' to Trump's nukes for sanctions offer
RIA Novosti - translated by J. Arnoldski

Trump's attempt to bring the one China policy and Russian sanctions into negotiations has failed out of the box.


Russia tests an ICBM.
The missile’s operational range is 11,000 kilometers [6,835 miles], its launch weight is 46.5 tonnes, the throw weight is 1.2 tonnes. It has one warhead.

winterspeak — Ruled by experts? Not the Fed

Democracy or technocracy?

Ruled by experts? Not the Fed

Put it on the board

Peterson people at CRFB are down for -21 million from Trumpcare. Game on, let's see how the acquisitors coming in do compared to the intellectuals going out...