The poor poorer and the rich richer

via The poor poorer and the rich richer

https://longhairedmusings.wordpress.com/2013/06/20/posthumous-guest-post-jud-evans-rip-jud-lays-out-his-epistemological-position-in-all-its-glory-repost-from-june-2013-updated-links-to-juds-writings-and-intellectual-legacy-2/

 Evolution is an unconscious, incognisant, uncaring, unplanned process. If it were true, that genes used morals as a cloak for sex then ironically it would position the very advocates and organisations which urge decent moral behaviour upon us as the very ones promoting strategies leading to sexual behaviour – that such sexual intercourse should remain within the parameters of couplings sanctioned by the church makes little difference to the incongruity of such a situation for the Rusean message:

‘Be nice to others and you will get more nookie,’ has the same message whichever way you look at it.
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Freedom Gas, US DOE lets one go!

9acb3-fart2bcapture-tiff

Bum Belching really is a very pseudo science notion, we all can understand that can’t we?.

EUROPE HAS NO FREEDOM BUT TO CHOOSE “FREEDOM GAS” (MADE IN AMERICA) BY TONY CARTALUCCI

7 June 2019 — Global Research

SWITCH OVER TO MORE EXPENSIVE US GAS UNDER THE THREAT OF SANCTIONS?

The US Department of Energy (DOE) recently renamed US liquefied natural gas (LNG) exports “freedom gas.” But freedom for who? For Europe which already has a cheap and reliable source of natural gas, but is being forced to switch over to more expensive US gas under the threat of sanctions? Certainly not.

Or freedom for Russia who supplies Europe with much of its natural gas to compete openly and fairly with the United States? Most definitely not.

Or is it freedom from competition for the US?  Yes, indeed.

It is often contradictory branding that heralds various chapters of US injustice at home (under the draconian “Patriot Act” for example) and abroad, such as during the illegal invasion and occupation of Iraq carried out under the dubious name of “Operation Iraqi Freedom.”

NOT THE ONION

END OF THE PETRO DOLLAR AND THE FAILURE OF THE CARBON CURRENCY END GAME.

https://longhairedmusings.wordpress.com/2014/04/11/end-of-the-petro-dollar-and-the-failure-of-the-carbon-currency-end-game/
Putin Has Upper Hand

Notice the hypocrisy of the US complaint that Russia’s bans on Ukraine goods is “politically motivated”.

What the heck are US sponsored sanctions if not “politically motivated”. Was Obama dumb enough to believe Russia would not respond? Or did he simply not care about the consequences to Ukraine and Europe?

By now, two things should be crystal clear

Russia has the upper hand.
More sanctions cannot possibly help.

Finally, the statement by Nuland regarding “reverse flows of natural gas from Slovakia, from Hungary, from Poland,” is preposterous.

For starters, the infrastructure is not in place. But even if the infrastructure was in place, precisely where are Slovakia, Hungary, and Poland going to get the gas to send to the Ukraine?

The apparent answer is Russia, and Russia can cut off all gas to Europe in response.

The only thing missing in this sorry charade is more counterproductive bellowing from senator John McCain about putting missiles in Georgia.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
http://globaleconomicanalysis.blogspot.com/2014/04/putin-sends-letter-to-18-countries.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+MishsGlobalEconomicTrendAnalysis+(Mish%27s+Global+Economic+Trend+Analysis

#151: The Great (brick) Wall of China

HOW SERIOUS IS THE CHINESE DOWNTURN?

For more than ten years, capital markets have had one perennial obsession, with Wall Street, in particular, rising or falling with the latest change of sentiment over Fed rate policy. Now, though, a new fixation has taken over, with stock markets reacting to every slightest positive or adverse nuance in trade talks between China and the United States.

These obsessions share an irony, which is that the outcome of neither has ever been in much doubt.

https://surplusenergyeconomics.wordpress.com/2019/06/06/151-the-great-brick-wall-of-china/comment-page-1/?unapproved=13025&moderation-hash=a5934f093401e922ef3f70103e7dd676#comment-13025

drtimmorgan
on June 9, 2019 at 7:16 am said:
What we’re witnessing is an unfolding collision between the ‘real’ economy of goods and services and the ‘financial’ economy of money and credit. When these are in conflict, there can only be one winner.

What is so important now has little to do with money (which is why monetary fixes won’t work) – we’re seeing real categories of activity, from cars and steel to components, chips, trade and many other volume measures of activity turning down. Logically, what happens next is a downturn in the use of commodities.

I’ll look at monetary issues in an article here ASAP.

https://surplusenergyeconomics.wordpress.com/2019/06/06/151-the-great-brick-wall-of-china/comment-page-1/?unapproved=13025&moderation-hash=a5934f093401e922ef3f70103e7dd676#comment-13025

  • Hi Tim, Externally held debt is very important when it comes to making adjustments to relate Aggregate demand dropping off and balancing Exports and Domestic demand. The WIR currency in Switzerland is reckoned to have been one of the balancing factors in the Swiss Economy ( according to Bernard Leitear)
    Anyway, I made a mammoth Energy economy spreadsheet last year.

    https://drive.google.com/file/d/1jlcoMGZWSXVwGuStQgHfhZ1CDy84zyWX/view?usp=sharing

    columns u-w detail external debt by nation from the CIA Factbook.
    China has less than 2% of its domestic debt held abroad whilst USA has just under 20% , this is hugely significant where the Money Creator has the upper hand ( see Greece for details ) or indeed Japan, in Princes of the Yen, Prof. Richard Werner shows how the Fed had control of Japanese central bank policy which was used against Japanese interests leading to the lost Decade of the 90’s.

    Apart from the Casino Finance economy getting back to ECOE considerations, it does remain to be seen what the truth of Peak oil will be in terms of how steep the decline is and so forth ( indeed if it is at all?)

    I think it is easy to overlook the damage that the disproportionate share of output going to the financial sector is. Effectively the energy we do have is being misapplied and not directed to productive ends, absent the bed wetting over CO2 emissions , perhaps some focus on this would go along way to solving what are in fact mad made problems of the double entry book keeping kind.

    L. Erchard once wistfully noticed that ’Inflation has never been a law of development, it has
    3
    always been stupidity of fools ruling the country.’ The non-inflationary economy is based upon the
    money supply effected against the commodity-backed metrological background, legal prohibition of
    usury and the realignment of the tariffs

    by the ‘natural monopolies’.
    https://longhairedmusings.wordpress.com/2019/06/06/in-quest-of-national-idea-energy-ruble-bound-to-be-the-hardest-currency-victor-efimov-newspaper-chas-pik-may-6-2004/

  • The question of peak oil is being re-framed right now. The parameters for me have little to do with available reserves, but everything to do with affordability and cost, the latter as trend ECoE.

    Over time, the ECoE of oil is rising. As total energy ECoE also rises, prosperity declines. This reduces how much people can afford to spend on oil. If the affordability number falls below ECoE, production becomes loss-making, which is why I think we’re going to have to subsidize shales, and will have to do the same for renewables – by ‘subsidize’, I mean making cheap capital available, not handing over taxpayers’ money.

    No subsidy is cost-free, of course, but we’ll be paying for it, I think, through inflation, not through taxes.

    This is part of a broader picture which points towards inflation as being necessary, first as a concomitant of subsidizing energy supply, and second as our only way out of gigantic debt. The deliberate, ‘no alternative’ triggering of inflation suggests the destruction of the value of money, not at all surprising when you think of money as a ‘claim’ on real economic output, in a situation in which real output is falling whilst the quantity of monetary “claims” has carried on expanding. The gap between the two – which SEEDS terms “excess claims” – is a pretty good way of calibrating the probable scale of the next crash (“GFC II”).

    I think the ‘establishment’ or ‘consensus’ has, as yet, no real conception of what is happening. The reason why I’ve covered China here is that it’s one of the three big themes now, the others being the monetary outlook and the issue of the environment. Other shocks are likely, of course, with the UK likely to be one of them, but these are ‘the big three’.

  • “No subsidy is cost-free, of course, but we’ll be paying for it, I think, through inflation, not through taxes.”
    Real costs are costs in Resources which are actually used in a mutually exclusive choice. I.e a Binary Choice or Multiple choices where within time x only option y can be realised.
    My own view is that smaller localised solutions in symbiotic networks will meet production and consumption needs in the future and artificial measures such as Inflation based upon positive interest rates ( Price of Money ( financial capital) which is, in fact, an artificial construct. This is what Etimov is getting at in his 2004 article I linked to previously.
    The Choice we do have which is a Binary mutually exclusive one is do we wish to Maintain CIvic Society along the lines of whatever our conception of the Golden Age of “Capitalism” is 1950’s US or Mid 1960’s Europe perhaps? Or do we want to save the To Big to Fail Financial System? The Too Big to Fail Financial System and the Financial system ore two different things.
    When one considers the potential based upon the current state of technology one can be very optimistic, but one is not optimistic sensibly with any acceptance of the current Financialised Capitalism predicated upon the Military Industrial Complex.

    #DOLLARSANDSUITS #TANKSANDBOOTS #GUNSORBUTTER
    It’s left, its right, in or out is best, leaves the meat of the whole subject unbothered by any serious questioning.

    1. The Military Industrial Complex

    2. The Money Power

    3. The Corporate revolving door

    4. United States Dollar hegemony ( Peanac)

    5. Oceana or Eurasia

    6. Brave New World for the 3%

    7. 1984 for the 97%

    If the great and powerful had the beneficence and wisdom of Gods, then all this would have been well: if with a greater knowledge of what is good for the people, they had as great a care for their interest as they have themselves, if they were seated above the world, sympathizing with the welfare, but not feeling the passions of men, receiving neither good nor hurt from them, but bestowing their benefits as free gifts on them, they might then rule over them like another Providence. But this is not the case. Coriolanus is unwilling that the senate should show their ‘cares’ for the people, lest their ‘cares’ should be construed into ‘fears’, to the subversion of all due authority; and he is no sooner disappointed in his schemes to deprive the people not only of the cares of the state, but of all power to redress themselves, than Volumnia is made madly to exclaim:

    Now the red pestilence strike all trades in Rome,
    And occupations perish.

    https://ebooks.adelaide.edu.au/h/hazlitt/william/characters-of-shakespeares-plays/chapter6.html

    The care of the state cannot, we here see, be safely entrusted to maternal affection, or to the domestic charities of high life. The great have private feelings of their own, to which the interests of humanity and justice must curtsy. Their interests are so far from being the same as those of the community, that they are in direct and necessary opposition to them; their power is at the expense of our weakness; their riches of our poverty; their pride of our degradation; their splendour of our wretchedness; their tyranny of our servitude. If they had the superior knowledge ascribed to them (which they have not) it would only render them so much more formidable; and from Gods would convert them into Devils. The whole dramatic moral of Coriolanus is that those who have little shall have less, and that those who have much shall take all that others have left. :IBID

  • IN QUEST OF NATIONAL IDEA: “ENERGY RUBLE” BOUND TO BE THE HARDEST CURRENCY. VICTOR EFIMOV NEWSPAPER “CHAS PIK”, MAY 6, 2004

    https://longhairedmusings.wordpress.com/2019/06/06/in-quest-of-national-idea-energy-ruble-bound-to-be-the-hardest-currency-victor-efimov-newspaper-chas-pik-may-6-2004/

    None of the manuals on Economics puts a question of how a state gets wealthy; they focus on the art
    of getting rich within a single corporation, a single bank, or give a piece of advice to individual wealth.
    Nevertheless, in real life, the corporate effect proves to be achieved at the expense of some damage
    done to the state and society.

    The Russian economy has been
    purposely demonetized to hit one of the bottom positions in the world rating. This ‘blood’ loss was
    behind the collapse of all the parts of the industrial sector, and the intentionally created ruble vacuum was
    designed to be filled with US dollars and other monetary substitutes.
    There is no need at all to talk about the banking sector ‘development’ if we are aiming at the establishment
    of the financial atmosphere that would facilitate real production. Banking could ‘develop’ for the account of
    finance pumped out of the industry by means of the interest rate. We need to restore
    the functionally appropriate relation of ‘money supply to GDP’ by a ‘one-shot blood transfusion’

    Debt is money it is difficult to see how economies can grow without growth in debt, the velocity of money notwithstanding.
    That is a separate question to prosperity predicated upon ECOE and surplus energy. To look at that the Etimov article applied to China and the context of BRICS and the new SIlk ROad is very important.

    I find the paradigm shift currently taking place important, the new Washington Consensus monetary system will be predicated on CO2 measures I am sure but not Energy surplus or energy units. China and the Brics I think will be looking at Energy commodity units and key commodity resources. with Gold in the mix, as per Leitaers TERRA.
    https://www.researchgate.net/publication/320445428_Global_primary_energy_use_associated_with_production_consumption_and_international_trade#pf9
    Tim, regarding seeds my Blockchain project is now progressing with Alexandria/IOP who have a system for publishing/monetising scientific data sets, developed with MIT, it is perfect for commercial distribution of Seeds, let me know if you would like me to expand on how.

    https://longhairedmusings.wordpress.com/2019/06/02/which-would-you-rank-as-the-best-crypto-if-you-think-something-different-tweet-us-back-telling-us-why-realbitcoinwiki-flo-because-iop-blocktechceo/

    https://www.openindexprotocol.com/

    https://etdb.caltech.edu/

Johan on June 7, 2019 at 7:26 pm said:
I was in Shenzhen only 6 weeks ago, and I must say, I was pretty taken by the place !
I don’t think I have much to contribute to your article Dr. Tim, other than to point out the amazing infrastructure over there. The High speed rail system is impressive, Shenzhen railway station is the size of a football stadium. HST trains depart every 6mins.
Before seeing Shenzhen, I used to smile when the UK talked about HST, – now I just burst out laughing !
Now I know that this is just a snapshot, and it is not indicative of the whole country, but none the less. At the turn of the millenium, I spent about 5 years working in the USA, and the infrastructure in that country was falling apart then. So where American infrastructure is falling apart, the Chinese are rapidly building up their own.
When money becomes worthless, having something real and tangible is what it will all come down to.

Reply ↓

Xabier
on June 7, 2019 at 8:38 pm said:
‘Real, tangible’ and……edible? or a route to what is?

drtimmorgan
on June 8, 2019 at 8:38 am said:
It’s an interesting theory, Johan, though something like a HST system is only of continuing value if you can afford to maintain and operate it.

rogerglewis
on June 8, 2019 at 3:13 pm said:
Is it an electrified system? On affordability Tim, this is a question of resource availability not of the availability of finance, this is why internal over externally held debt is highly cogent to the question.
As seeds, is concerned with surplus energy available for prosperity, I am constantly struck by the conflation of Financial affordability and debt constraints,
and the ignoring of resource availability, I think it is a linguistic problem rather than a logical mistake. One of y favourite Blogs is the GolemXIV blog which has a section The Liars Lexicon, could you perhaps make a SEEDS Lexicon

http://www.golemxiv.co.uk/liars-lexicon/

rogerglewis
on June 8, 2019 at 3:28 pm said:
http://www.golemxiv.co.uk/liars-lexicon/volatility-the-market-god-slayer-of-nations/
The modern markets are trading volatility. They need it. They make it. They get others to make it for them – and tell them they’re going to do it and when. They try to get inside knowledge of who will make what waves. Those who get to know ‘front run’ events. They cheat.

I have been talking in terms of ‘assets’ rather than just shares for a reason. The reason is that debt is traded exactly the same way.

No one buys and holds debt. They trade it. Its value goes up and down. It is volatile. If the markets can create debt volatility, by, let’s say, speculating on default using CDS bets – then they can track and trade that misery, for profit. That is what has been happening and what is going to happen more and more.

Volatility is what makes the world go up and down! Sadly their ‘up’ and our ‘down’.

houtskool
on June 9, 2019 at 12:57 am said:
And if people can afford to travel with it. Affordibility vanishes with rising ECoE.

They will try though >>> MMT

And that undermines the currency. We’ll all have to pick our poison. Me myself and I took a few red pills from the docs cupboard while he was asleep.

drtimmorgan
on June 9, 2019 at 7:16 am said:
What we’re witnessing is an unfolding collision between the ‘real’ economy of goods and services and the ‘financial’ economy of money and credit. When these are in conflict, there can only be one winner.

What is so important now has little to do with money (which is why monetary fixes won’t work) – we’re seeing real categories of activity, from cars and steel to components, chips, trade and many other volume measures of activity turning down. Logically, what happens next is a downturn in the use of commodities.

I’ll look at monetary issues in an article here ASAP.

houtskool
on June 9, 2019 at 1:08 am said:
Indeed, rogerlewis, they trade in debt, misery and grandmothers. Makes me sick. Coffins of credit.

rogerglewis
on June 9, 2019 at 7:41 am said:
Your comment is awaiting moderation.
“what happens next is a downturn in the use of commodities.”
Hi, Tim, I follow the Baltic Dry Goods index fairly closely.
Significant levels
On 20 May 2008, the index reached its record high level since its introduction in 1985, reaching 11,793 points. Half a year later, on 5 December 2008, the index had dropped by 94%, to 663 points, the lowest since 1986;[9] though by 4 February 2009 it had recovered a little lost ground, back to 1,316.[10] These low rates moved dangerously close to the combined operating costs of vessels, fuel, and crews.[11][12]

By the end of 2008, shipping times had been already increased by reduced speeds to save fuel consumption, but lack of credit meant the reduction of letters of credit, historically required to load cargoes for departure at ports. Debt load of future ship construction was also a problem for shipping companies, with several major bankruptcies and implications for shipyards.[13][14] This, combined with the collapsing price of raw commodities created a perfect storm for the world’s marine commerce.

During 2009, the index recovered as high as 4661, but then bottomed out at 1043 in February, 2011, after continued deliveries of new ships and flooding in Australia.[15]

Though rebounding to 2000 on 7 October,[16] by 3 February 2012, the index made a new multi-decade low of 647 on a continued glut of dry bulk carriers and decreases in orders of iron and coal.[17]

On 10 February 2016 the Baltic Dry Index reached the historic low of 290.[18]

By November 15, 2016 it rebounded to over 1000 sending the entire shipping industry to massive gains. Some companies reached 2000%+ in share price gains in as little as 5 days.
From Wikipedia https://en.wikipedia.org/wiki/Baltic_Dry_Index
https://www.bloomberg.com/quote/BDIY:IND

Selection_793
1132, today.

Though rebounding to 2000 on 7 October,[16] by 3 February 2012, the index made a new multi-decade low of 647 on a continued glut of dry bulk carriers and decreases in orders of iron and coal.[17]

BDI

2016 was a dodged bullet, Could it be dodged again?
the 1100 level seems like a pretty normal level of activity sub 750 I would worry above 1250 I would also worry. Of course, an Index that is Denominated in an Abstract Currency unit has many limitations but does offer a clue to the direction of momentum in trade flows. ( but not energy FLows,
I have linked this before but do so again this paper is incredibly important.

https://www.researchgate.net/publication/320445428_Global_primary_energy_use_associated_with_production_consumption_and_international_trade

https://longhairedmusings.wordpress.com/2018/07/08/redefining-fiscal-conservatism-the-terra-energy-based-fiscal-unit-fores-and-lagom-white-paper-boundary-conditions-for-a-fiscal-conservatism-based-upon-circular-economics-part-one-scope/

https://drive.google.com/file/d/1jlcoMGZWSXVwGuStQgHfhZ1CDy84zyWX/view?usp=sharing

Selection_791

 

 

https://longhairedmusings.wordpress.com/2018/07/08/redefining-fiscal-conservatism-the-terra-energy-based-fiscal-unit-fores-and-lagom-white-paper-boundary-conditions-for-a-fiscal-conservatism-based-upon-circular-economics-part-one-scope/

For MMT’s This exchange between Steve Keen and Bill Mitchell is relevant to the Real Goods V Financial Measures point, and much much more.!

MMT’s ignorance of economic thought, May 24 at 11:10amBill Mitchell has a new post “A surplus of trade discussions” responding to some of the criticisms of the MMT position on trade deficits (though he didn’t link to any of them, including my post “Some Preliminary Questions for MMT“). He opens with the proposition that “exports are a cost and imports are a benefit”, and reaches the following

conclusion:

When it comes to trade, MMT focuses, initially on the real layer of the analysis. Thus it is undeniable (and I am surprised to read all those who are torturing themselves trying to deny it) – exports are a cost and imports are a benefit.
Giving some real thing away is a cost. Getting some real thing is a benefit. That doesn’t equate, as I have been reading the last few weeks, in a conclusion that MMT’s preference is for a nation to have a current account deficit.
It just states the obvious fact that exports, by definition, involve sacrificing real resources and depriving a nation of their use.

Imports on the other hand clearly involve receiving final goods and services where the real resource sacrifice has been made by the exporting nation.

In a world where we produce to consume – not for its own sake – then receiving goods and services is better (real terms) than sending them elsewhere.

Steve Keen Responds.

Since I was one of the ones denying Mitchell’s opening gambit—though there must have been other people “torturing themselves” since all I noted in my post was that I disputed it as a premise—I had better reply now on this issue. I do not deny the proposition that “Giving some real thing away is a cost. Getting some real thing is a benefit”: that’s obvious in a materialist world. What I do deny is that this proposition has any relevance to either macroeconomics or trade theory. And I am not the first one to deny this: that honour goes to Karl Marx. This raises one of my major issues with MMT: advocates know their own economic logic very well, but they seem to have little knowledge of compatible precursors to their views (or even compatible contemporaries, like complexity theory). Consequently, whether they realise it or not, they often end up making arguments that would be right at home in a conventional Neoclassical textbook. These arguments are just as wrong in MMT hands as they are in Neoclassical ones. This “exports=cost, imports=benefit” MMT analysis of international trade is a classic case in point. There are at least three ways in which this MMT perspective is a backward step in relation to preceding enlightened work in economics:

Standard Neoclassical work on the irrelevance of opportunity cost below full employment
Marx’s arguments on the irrelevance of the seller’s utility in trade
The extensive Post-Keynesian research on declining marginal costs of production and economies of scale.
INAPPLICABILITY OF OPPORTUNITY COST EXCEPT AT FULL EMPLOYMENT