Mitchell’s laws:
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive.
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Can there be an economy in which no one owns anything? Is there a difference between “own” and “possess”?
Recently, I read an article in NewScientist Magazine, titled “Lost in the cloud: How safe are your online possessions? (02 April 2013 by Douglas Heaven) Here are some excerpts:
In the digital age, your files and memories are not truly yours any more. They belong to the cloud.
To keep his valuable footage safe, Kyle Goodwin had placed it in a popular storage facility. On 19 January last year, all those assets disappeared without warning. As did everything put there by more than 150 million others. When he asked for his livelihood back, he was refused.
The US government, who confiscated his material, is essentially claiming that he forfeited his rights to his property the minute he uploaded it.
Clusters of servers thousands of miles away now hold our favourite music, photo memories and vital correspondence. We are headed for a world in which we will live our entire digital lives in the cloud, but these developments are poised to change our basic assumptions about ownership in surprising ways.
The article continues on that theme – the idea that in the digital age, ownership will not be clear cut. For instance, do I own this blog?
Everything you’ve read in the past 1000 posts is stored on servers managed by something called “Wordpress.” I don’t know who actually owns those servers. Perhaps there are multiple owners. So, if the owners, whoever they are, decide to charge you — or even, me — for access to my own posts, do I have recourse?
Shared computer resources now sit in vast data centres owned by the likes of Amazon, Google or Microsoft. Amazon alone is thought to own 450,000 servers around the world, providing storage and other services to thousands of websites and. According to one 2012 study, every day a third of US internet users visit a site that relies on an Amazon server.
It is widely thought inevitable that by 2020 the cloud will run all digital life. Though you technically retain copyright if you have created the photos, videos or text you upload, the reality is that agreeing to the service terms generally means you forego many of the rights you might reasonably expect. For example, the popular photo-sharing app, Instagram, recently changed its terms after it was acquired by Facebook, giving itself a license to use people’s uploaded photos for advertising.
And it gets even more complicated:
If your file has already been uploaded by someone else – a digital copy of a Radiohead album, for instance – then Dropbox will just link you to the existing files rather than waste bandwidth and space by uploading a duplicate. Are those files uploaded by that other person now yours? Surely not. Untangling relationships with your possessions in the cloud quickly gets confusing.
Buy the NewScientist or go online (the cloud) to read the rest of this intriguing article, which continues to expand on the central point: Ownership of anything online is questionable, and may be resolved in favor of whomever owns the servers. Amazon might own the world.
And this belatedly, brings us to the point of this post: Money, having no physical existence, is nothing more than numbers on accounting spreadsheets. (See:A dollar bill is not a dollar and other economic craziness)
You never have seen, held, touch, tasted or smelled a dollar. That green piece of paper in your wallet simply represents a dollar. Just as a car title is not a car, and a house title is not a house, a dollar bill is not a dollar. It is a title.
You do not possess any of the money noted on your bank’s servers. You may own shares of General Electric or AT&T, but you do not possess these companies. Your ownership is stored on servers somewhere – servers that might have multiple owners – and your ownership depends on vagaries of the law – which also might be stored in the cloud.
Consider what happened in Cyprus:
Big depositors in Cypriot banks to lose 8.3 billion euros
Cyprus and international lenders decided that depositors who had more than 100,000 euros in the two banks will lose some of their money to contribute to the recapitalization of the institutions, along with shareholders and bond holders.
With the press of a computer key, 8.3 billion euros will disappear from depositors’ accounts. The banks made the unilateral decision that these euros did not belong to depositors, but rather are owned by the banks or by the banks’ creditors.
And lest you believe this was an anomoly, Fed governor Jeremy Stein said:
If a (big bank) does fail I have little doubt that private investors will in fact bear the losses. Dodd-Frank is very clear in saying that the Federal Reserve and other regulators cannot use their emergency authorities to bail out an individual failing institution.
There is an old expression, “Possession is nine tenths of the law.” While not literally true, it shows that historically, ownership was related to possession.
Now, fast forward to a couple decades from now, when all documentation might be online, and a case could be made that no one will own anything in the cloud. After all, the U.S. government made that very case about Kyle Goodwin’s materials.
If ownership of a house is determined by its title, and the title will exist only in the cloud, ownership of the title will be questionable. Then presumably anyone having access to a server can change the title, in which case, no one would own the house.
Can there be an economy in which no one owns anything? If so, what would such an economy be like? Would it be some sort of communism on steroids?
Without ownership, can there be motivation? Without motivation can there be progress or even survival? Can there be economics without ownership?
Perhaps it all seems far-fetched, today. But Cyprus questions ownership of euros deposited for safe storage in their banks. And the U.S. government questions ownership of files safely stored on line.
When all your records are spread over hundreds of thousands of servers around the world, and these records continuously swirl in microscopic, electronic packets, among all those servers, who owns the electrons that make up your files? Anyone?
For all I know, someone has downloaded a dictionary containing every word in the English language. Or more simply, has downloaded all 26 letters used in every English word. And rather than storing my words, the addresses of those letters are stored.
So, the words in this sentence may consist of nothing but addresses and may exist on many servers. They might be just as a series of references to that original list of letters, and ten seconds from now, may have moved to many different servers. How would I claim which words are mine if I can’t claim ownership of that original list of letters?
Now may be the time to visualize what economics can be, without clear ownership.
Is such an economics even possible?
Rodger Malcolm Mitchell
Monetary Sovereignty
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Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports
#MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Pre-Columbian societies in the US had no money and no concept of “ownership”, at least of land. I guess it is arguable whether they had “economics” as such, certainly not the way we think of it today. They were “communistic” (perhaps “communal” is a less-charged word for it) in the way that a family is, or a religious order.
However, the Kyle Goodwin case is quite Orwellian. The real question it brings up is not of ownership, but of government powers and control of our lives. The government has not asserted that Goodwin does not own the materials he created, but has refused access by innocent parties, including Goodwin, to data on the servers that contained pirated materials. It’s as if you put your physical property in a storage unit, and because a thief had also stored stolen property in the same building, the government seized yours along with his and would not return it to you. The cloud has nothing to do with the legal issues.
“A government big enough to give you everything you want, is a government big enough to take away everything that you have.”
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Golfer1john says, “Pre-Columbian societies in the US had no money and no concept of ‘ownership,’ at least of land.”
Respectfully, I disagree. Ownership simply means control. Whoever has power has ownership. Pre-Columbian societies “owned.” They competed for resources, and fought each other over territory. They struggled for control — i.e. ownership. Most tribes were not communistic per se; but were like mafia families, or warlord clans. Some tribes built empires based on slaves. All of them “owned.”
Some people fantasize that pre-Columbian societies were delightfully idyllic. People do this because their god is the money system, and any alternative to that system seems desirable. However it’s a fantasy. Consider the Aztecs, who were defeated by Spanish Conquistadores. Would you like to live in the days before the Spaniards came? The Spaniards only won by allying with surrounding tribes, who were tired of the Aztecs abducting people as slaves and as religious sacrifices.
All social mammals have social hierarchies, or a pecking order. Primates, dogs, dolphins, you name it. I don’t like it, but I didn’t design it.
I wonder, though. Is there an afterlife? And if so, will we have to put up with this same earthly madness?
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The Aztecs were in Mexico, not the US. Still, they traded with the Anasazi and Hohokam in Arizona, and other tribes. Nobody at the various ruins in AZ said anything about wars or fighting or slaves. They all seem to have gotten along well with their (relatively remote) neighbors, perhaps because their only contact was for trade, not competition for resources.
Maybe things were more crowded in the Yucatan.
Delightfully idyllic? Not hardly. Desert life was difficult. Maybe that’s why they couldn’t afford to fight each other, as well as nature.
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“They all seem to have gotten along well with their (relatively remote) neighbors, perhaps because their only contact was for trade, not competition for resources.”
I say that competition is everywhere, among humans and non-humans. Tribes and clans made war on each other, took slaves from each other, and competed with each other for game, water rights, and territory.
Indeed, life was brutal with competition. Tribal members could not afford to show mercy to their enemies, since other tribes would call them weak. This occurred in the Americas, in Africa, Mongolia, the Asian steppes, and everywhere else.
My main point is that we won’t mature as a species if we delude ourselves that pre-columbian society was some kind of utopia. I think it’s better to acknowledge that, collectively speaking, we have always been predators and murderers, and now it’s time to move past all that.
Perhaps it is not possible for us.
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I’m not saying it was utopia. Life in the desert was difficult. Populations were small and communities widely separated, and cooperation and avoidance of conflict was probably necessary for survival. Indeed, our concept today of grouping (for analytic purposes) small, isolated communities into larger populations is based on location and common methods of architecture, farming, pottery and weaving – not some imagined common leadership – with location dictating the resources they had available and the type of lifestyle which was possible. There is no evidence of war among Hohokam or Anasazi in the Sonoran desert region, or between them, or with the other groups that lived in other areas of Arizona, in the mountains and forests. The style of pottery common in Northern Arizona did not suddenly appear hundreds of years later in the South, as if one tribe had conquered another and taken over “their” land. There is ample evidence of trade, ranging far from their homelands, indicating that they knew of other cultures, but no evidence of conflict with them. Indeed, there is no evidence of why they seemed to suddenly abandon their homes and move elsewhere about 100 years before Columbus, only guesses.
The question was whether it was possible for an economy to exist without the concept of ownership, and I’m just saying that it apparently has existed, and suggesting some of the conditions that could be necessary if it were to exist again. Not that it existed or could exist in all circumstances. Apparently the Aztecs were quite different from the Hohokam in how they got along, or didn’t, with their close neighbors. Perhaps such an economy cannot exist at all anymore, unless there is first a massive extermination of most human life. And even then, it would probably not be universal.
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If you define “ownership” as documents, titles, and formal claims, then there have been many societies without ownership.
However, if you define “ownership” as power and control, then every society has had ownership.
I say that no matter what language or words we use, control is ownership. And since humans and other animals have always competed for control, there has always been ownership.
Can there be a society without ownership? Yes, to the extent that humans give up their desire for power, status, the control of others, and competition for resources. All these together comprise “ownership” (in my opinion).
Golfer1john says: “There is no evidence of war among Hohokam or Anasazi in the Sonoran desert region, or between them, or with the other groups that lived in other areas of Arizona, in the mountains and forests.”
>>Actually there is little evidence at all connected with the Anasazi, except for some cliff dwellings. They dated from 1300 BC, and they never lived in the Sonoran desert region. Were they peaceful, or warlike? We have no proof either way, but the word Anaasází is Navajo for “Ancient Ones,” or “Ancient Enemy.” The Navajo themselves were extremely warlike until the Spanish arrived, and which point the Navajo took up sheep farming, and moved from New Mexico to Arizona. My point is that in human history, there has always been trade, yes, but there has always been competition too, and it often leads to war. Competition is a struggle for control. Control is ownership.
Golfer1john says: “The style of pottery common in Northern Arizona did not suddenly appear hundreds of years later in the South, as if one tribe had conquered another and taken over ‘their’ land. There is ample evidence of trade, ranging far from their homelands, indicating that they knew of other cultures, but no evidence of conflict with them. Indeed, there is no evidence of why they seemed to suddenly abandon their homes and move elsewhere about 100 years before Columbus, only guesses.”
>>Granted, some of the desert tribes had little conflict with other tribes, since they were living in isolation, but there is almost always some hierarchy of status within a tribe. Higher status means more power and control, i.e. more ownership.
Golfer1john says: “The question was whether it was possible for an economy to exist without the concept of ownership, and I’m just saying that it apparently has existed, and suggesting some of the conditions that could be necessary if it were to exist again. Not that it existed or could exist in all circumstances. Apparently the Aztecs were quite different from the Hohokam in how they got along, or didn’t, with their close neighbors. Perhaps such an economy cannot exist at all anymore, unless there is first a massive extermination of most human life. And even then, it would probably not be universal.”
>> I suppose it’s a question of semantics and definitions.
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you’re almost there, rodger: http://blog.thezeitgeistmovement.com/mission-statement
keep it coming. keep evolving.
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http://en.wikipedia.org/wiki/The_Venus_Project#Resource-based_economy
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What happened in Cyprus was not new, just a variation on the practice of “nationalization” of assets owned by foreigners, as developed by autocratic governments in various third world countries. It is significant that it was sanctioned by European governments supposedly committed to democracy, the rule of law, and human rights.
The Cyprus theft is not what is meant by “private investors” bearing the cost of the bankruptcy of a large bank. Investors, up until the GM bailout, have always been the first ones to bear the losses in bankruptcies of any business. Uninsured depositors of a bank have always been, and will still be, in the same sort of position as unsecured creditors of other bankrupt businesses. They’ll be in line ahead of investors and behind secured creditors, unless the government again interferes.
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A big variation, in that it was not nationalization and not just of foreigners.
It simply was a case of a business taking money entrusted to them, essentially identical with MF Global stealing supposedly segregated customers’ funds.
It leaves open the central question, “Who owns the money in my checking account?” If the bank owns the money, how can I write a check against it? But if I own the money, how can the bank take it?
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I understood it was the government taking the money, not the banks. Just like the government, not the computer company, has confiscated Goodwin’s files.
And that most of the big accounts in Cyprus were from offshore, like from the Russian mafia, who found Cyprus to be a congenial tax haven.
The notion of government taking the accounts of rich Cypriots conflicts with that of the rich Cypriots controlling the government.
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May I disagree?
Question: Were the Cypriot deposits stolen by the government, or by the banks?
Answer: Both.
The Troika bankers (IMF, ECB, and EC) urged the Bank of Cyprus and the Cyprus Popular Bank to invest in sovereign euro-zone bonds, especially Greek bonds. Cypriot banks naively assumed that the Troika would backstop them if anything went sour, but the Troika betrayed them, as it had planned to do all along. When the holders of Greek bonds were forced to take a loss, the two biggest banks in Cyprus were finished. The Cyprus Popular Bank was closed, and billions of euros in deposits were stolen to keep the Bank of Cyprus going. It too will eventually collapse, since Cyprus does not have its own currency. Meanwhile the Cypriot Central Bank just took on another 10 billion euros in killer debt.
The Troika destroyed Cyprus to make an example. If you are a small country, and you want to use the euro, then you must obey Troika dictates. If you gain too much prosperity and independence by attracting foreign money, then the Troika will crush you, while it issues propaganda to legitimize the attack. Here are two examples…
TROIKA CLAIM: All the foreign depositors in Cyprus were Russian mafia.
REALITY: In Russia, most bankers are gangster-thugs who charge “protection” money to keep your account open. Average Russians put their money in Cyprus to guard it from Russian banksters. The Russian government knows this, and therefore allowed average Russians to deposit their money in Cyprus, in order to keep the Russian economy going. Moreover, foreign depositors who got robbed were not all Russian. Every depositor was robbed at the Bank of Cyprus and the Cyprus Popular Bank if they had an account of 100K euros or more. That includes individuals and businesses. Today the Cypriot government announced that insurance companies’ deposits will be debited along with everyone else’s.
TROIKA CLAIM: They were tax evaders who got what they deserved.
REALITY: Foreign depositors paid taxes in Cyprus, which forwarded much of the revenue to the Russian government. The “tax break” was simply that the Russian government didn’t nail them twice (once in Russia, plus once in Cyprus).
The Troika annihilated Cyprus, with the help of corrupt Cypriot politicians who want to stay on the Troika payroll.
Now Turkish Cypriots want some of the proceeds from the sale of gold reserves and natural gas, but Greek Cypriots say no, you can’t have any. You Turks owe us $1.3 billion for electricity you’ve used since 1963, and never paid for.
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You may disagree, of course, but I have a rebuttal and a question.
I consider the IMF, ECB, and EC to be “government”, and the Cyprus Popular Bank and Bank of Cyprus to be “banks”. If Cyprus Popular is now defunct, they didn’t get the depositors’ money, and if you say Bank of Cyprus got it, it must have been given to them by government, who took it from depositors. No government would stand idly by while banks levied an after-the-fact 10% fee on deposits. Banks don’t have that power, only government has it.
You seem to be saying that it is “average” Russians who have deposits exceeding 100K Euros in the Cypriot banks? If so, Russia is a lot better off than I thought.
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1.) “If ownership of a house is determined by its title, and the title will exist only in the cloud, then ownership of the title will be questionable. Then presumably anyone having access to a server can change the title, in which case, no one would own the house.”\
>> Unfortunately I must disagree. Whether we speak of houses, money, cars, resources, people, or anything else, the owner is whoever has control. And the more that ownership is questionable, the more it defaults to the rich, who control society.
For example, TBTF banks have no proof that they “own” houses. They do not record mortgages or sale transactions in county registers as they are legally obligated to do. They have no documentation, since they use the digital MERS system for their mega-mortgage-securities-frauds.
Nonetheless, judges and society say that TBTF banks control (and therefore “own”) whatever houses the banks arbitrarily point to. Sometimes the banks lock people out of their own houses, even when the people have paid off their entire mortgages.
Regardless of the topic, when ownership is not clear, ownership always defaults to the rich and to the politically connected. It’s part of the ever-widening gap of wealth and power, and the ever-increasing welfare state for the rich.
2.) “Ownership of anything online is questionable, and may be resolved in favor of whomever owns the servers.”
>> The people who own the servers are those who are in control. Ultimately that means bankers, the rich, and their puppet politicians. What they control, they “own.” And since they control most of humanity they “own” billions of people. Literally.
3.) “You do not possess any of the money noted on your bank’s servers.”
Correct. You may have deposited money in a bank account, but the bank owns the account, and can do whatever it likes with the account. Cyprus was the first example.
It gets worse…
In most nations, including the USA, derivative creditors have legal seniority over all other creditors, including depositors. The global derivatives bubble is now in the quadrillions. When it pops, the banks may simply steal from depositors, as we saw in Cyprus.
Here in the USA, the Glass-Steagall Act of 1933 prevented banks from gambling with depositor funds. That protection ended in 1999 when the bankers paid politicians to repeal Glass-Steagall. (Derivatives themselves were illegal under the Commodities Exchange Act, until politicians repealed this in 1982.) Under both the Bankruptcy Act of 2005 and the Dodd Frank Act of 2010, derivative claims have super-priority over all other claims, secured and unsecured, insured and uninsured. This means that in a major derivatives fiasco, derivative claimants can steal all deposits. The victims will include individual people, plus pension funds, 401k funds, city, county, and state governments, and so on.
This fiasco and theft are probably inevitable. Bank of America’s holding company has $75 trillion in derivatives, 71% of which are held in its depository arm. J.P. Morgan has $79 trillion in derivatives, 99% of which is in its depository arm. Section 716 of the Dodd Frank Act says that when a bank makes a bad derivative gamble, the FDIC will not cover depositors. Thus, politicians will say, “There’s nothing we can do. It’s the law.”
In short, the bankers own all. And the more ownership is questionable, the more it defaults to the bankers.
Some readers will flee into denial, saying, “The bankers won’t let this happen, since it would mean the end of the entire banking system.” But is has ALREADY happened in Cyprus. And Cyprus was only the first case. Cypriot politicians could save their nation by dumping the euro currency, but they want to stay on the Troika payroll, which obligated them to steal depositors’ money.
It’s called greed, and greed is a virus. The more it kills, the fiercer it rages, thereby hastening the virus’s own doom (while causing agony in the process). The farther we fall into a depression, the more politicians and the corporate media scream for austerity. The poorer people become, the more selfish people become, which worsens their poverty all the more.
I apologize for being so negative, but if anyone has reason to be optimistic that is not based on simple denial, I’d like to hear his views. I get no pleasure from doom-saying. Please tell me I’m wrong.
4.) “Can there be economics without ownership?”
No. At least, not in mankind’s current state of evolution, in which the love of power is greater than the power of love. There is always a pecking order. Even in Communist societies there are social hierarchies, with a politburo (executive committee) in charge.
Power and control mean ownership. You may claim to own your body, but if I can have you executed with a snap of my fingers, then I own your body. I may claim to have title to a car, but if you can physically overpower me, and drive the car whenever you wish, against my will, then you own it, regardless of papers or rhetoric.
In all cases with all items, the owner is whoever has control. And the controllers are bankers, the 1%, and their puppet politicians / bureaucrats.
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Ownership is about making/protecting money primarily. As I see it, there can be an economy in which there is no ownership if everyone is “somehow” elevated to billionaire status w/o inflation. Since you can’t spend all your billion you’ll have to quit worrying about ownership/money and do whatever it was you always wanted to do before you got bit by status, the money bug, and trying to make a living. Money before people will flip over to people before money, the horses before the cart(els).
Eventually this will lead to a moneyless state as we stop thinking about money and total trust in one another takes over. Everyone will work for the love of the work– if there is any work left to do given the rapid pace of automation. (Pony express to telegraph to wireless; vacuum tube to transistor to atoms(atomic circuitry); paper/coin to checks to electrons in computers to faith and trust and ultimately, knowhow = real wealth as symbolized by the drowning man grabbing the inner tube instead of the sack of gold coins.
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Tetrahedron, I salute your willingness to positively dream. Same with Rodger. I am cynical, but I know that anything is possible. If we would have a better future, we must first be willing to dream of a better future.
By contrast, austerity pushers kill dreams. They offer nothing but despair. To “reduce the deficit” is to reduce hope.
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NEW ITEMS
Crain Communications is a Detroit conglomerate that publishes magazines such as Advertising Age, Auto Week, Automotive News, Crain’s Chicago Business, Crain’s New York Business, Modern Healthcare, Television Week, and many more.
Regardless of the various magazines’ topics (cars, plastics, cosmetics, whatever) almost every issue of every magazine has at least one article or blurb claiming that we must have more austerity, since we have a “deficit crisis.”
An example from today praises the Clinton surplus, and says that austerity is the road to prosperity: “Straight talk needed on cutting deficit.”
http://www.crainsnewyork.com/article/20130421/OPINION/304219990
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It isn’t just economists that push for austerity. Many historians do too. Niall Ferguson of Scotland is a “history professor” who has made a life of championing the rich. His toadyism brings lucrative speaking gigs, and lets him visit the homes of people like Mitt Romney and John McCain (his idols). Ferguson claims that Obama is a “Keynesian.”
In an article titled, “Why the young should welcome austerity,” Ferguson says we must have more austerity because, “Governments have allowed the current generation of voters to live at the expense of those as yet too young to vote or as yet unborn.”
The rest of the article is so full of lies that I’m too nauseous to say anything more.
http://www.bbc.co.uk/news/world-18456131
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Bank of Israel Governor Stanley Fischer keeps imposing austerity on Israel, in order to widen the wealth gap, and increase poverty. It’s called “fiscal responsibility.”
Fischer was First Deputy Managing Director of the IMF, and then Chief Economist at the World Bank. Now, as head of the Bank of Israel, he wants the deficit reduced to 2.75% of GDP or less because, well . . . just because. (Israel’s current budget deficit is about 4.75% of GDP.)
Fischer rejected a new attempt by Finance Minister Yair Lapid to increase the deficit target in 2013-2014 above 3% of GDP.
Fischer is very tight with PM Netanyahu, who himself was finance minister, and is radically pro-austerity.
http://www.haaretz.com/business/fischer-slaps-down-latest-lapid-proposal-to-increase-deficit.premium-1.516740
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Australia’s government (like Israel’s) is Monetarily Sovereign, and therefore does not need or use tax revenue. Nonetheless, the government says it will impose more austerity because tax revenue is down. Prime Minister Julia Gillard and her ruling Labor Party (sic) claim that the government lost $7.7 billion. (As if a sports scoreboard could “lose” points.)
http://www.bloomberg.com/news/2013-04-21/australia-sees-wider-deficit-as-currency-hits-revenue-swan-says.html
Incidentally an editorial in today’s Sydney Morning Herald says (incredibly) that austerity addiction is prolonging the depression.
“A major reason for the slow recoveries is the absence of fiscal stimulus in much of the developed world. In emerging markets, spending has been much stronger than in previous recoveries, but the opposite is true for developed countries. Those changes reflect the determination to follow a path of austerity in much of the developed world. Many developing countries, having built up foreign exchange reserves in the years before the recession, do not need to follow that course.”
Too bad they had to throw in that last sentence, which is garbage. First of all, foreign exchange reserves are irrelevant. The reason why developing countries are not drinking the austerity kool-aid is that their economies are based on sweatshops and exports. They have little or nothing in the way of social programs. Hence they do not obsess on austerity. Second, the article does not clarify what “spending” means. (Consumer spending? Government spending?) Third, no nation “needs” austerity. Euro-zone nations are obligated to destroy themselves, but they did not “need” to surrender their MS.
Oh well. At least the article says we need more “fiscal stimulus.”
http://www.smh.com.au/business/austerity-addiction-hobbles-wealthy-countries-race-to-recovery-20130421-2i8go.html
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The Irish government vows to continue increasing austerity.
http://www.independent.ie/irish-news/end-austerity-now-burton-and-gilmore-in-serious-rift-29210709.html
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Perhaps oversimplified but austerity reminds me of the adage ” if the medicine isn’t bitter it’s no good.” I think people still hold on to that notion, that somehow punishment is the way to avoid hell, that is, make hell to avoid hell.
On the other hand we have the thinking that if it feels good it’s a sin. Remember the 1965 movie with George Peppard, “What’s so bad about feeling good?” That old time religion has worked its way into the machinations of “modern ” economics. And those who know better are behind the scenes chuckling.
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