Dr.D. has been very quiet on his blog, but he has returned with a couple of blog posts in early July, which I have just today noticed, I only visit very intermittently as the blog remains largely inactive. This is one of the more recent posts.
You will have to click on the link to read the article. That it is linked on Dr. D’s. blog rather leads me to assume that he endorses the views advocated in the manifesto. Read through some of the “names” that have endorsed this nonsense. Impressive. Scary. If these chap’s, who, unfortunately probably carry a significant measure of “influence” endorse this tripe, watch out. I am curious exactly “who” they are seeking to influence. It would seem most likely that they are apologists for their political masters and benefactors. Possibly their time would be better, and more productively spent going out and actually producing something in the real world.
I digress, let us examine the arguments, starting with a brief introduction.
More than four years after the financial crisis began, the world’s major advanced economies remain deeply depressed, in a scene all too reminiscent of the 1930s. And the reason is simple: we are relying on the same ideas that governed policy in the 1930s. These ideas, long since disproved, involve profound errors both about the causes of the crisis, its nature, and the appropriate response.
So far, so good. Essentially I can agree with this paragraph.
These errors have taken deep root in public consciousness and provide the public support for the excessive austerity of current fiscal policies in many countries. So the time is ripe for a Manifesto in which mainstream economists offer the public a more evidence-based analysis of our problems.
A number of ideas are introduced here: [i] that the ‘public’ support ‘austerity.’ While some do, some do not. The elections in France, Spain, and Greece recently demonstrate that the ‘majority’ most certainly do not support ‘austerity.’ [ii] The economists are going to offer us ‘evidence based’ analysis. Positivism. In economics, simply an inappropriate methodology. Humanity is not amenable to the scientific method as utilised in physics; therefore, a complete waste of time, and provides results, or conclusions, that in the light of history and empirical data, to be wrong, time and time again.
Just as an aside, if these chappies are ‘mainstream’ economists, surely they as mainstream are the majority who control the policies being set and followed? How is it that they are the mainstream, and yet, seemingly, are without influence? Are current policies being set by the ‘minority’ crank economists? If so, how did they manage to grab the reins of power?
The truth is, it is these fuck-wits that have controlled economic policy, and that includes both the policies that created this cluster-fuck, and also the total failure to implement the correct economic policies to drive a recovery. This is nothing more than a lame compendium of excuses, pool muddying and general lies.
The causes.
Many policy makers insist that the crisis was caused by irresponsible public borrowing. With very few exceptions – other than Greece – this is false. Instead, the conditions for crisis were created by excessive private sector borrowing and lending, including by over-leveraged banks. The collapse of this bubble led to massive falls in output and thus in tax revenue. So the large government deficits we see today are a consequence of the crisis, not its cause.
‘Many,’ who exactly are the many? Name names. Provide your evidence. Do not make a general statement that says absolutely nothing. It is grossly misleading.
The blame, is laid at the feet of the private sector, viz. us, joe public. We borrowed excessively to buy houses and consumer goods, which is true, we did, and the banks, which loaned us the money to do so.
So where did the banks find the money to lend to us, the over-leveraged debtor? Well from fractional reserve lending, which, violates legal contracts, with government blessing, to allow credit and money creation by the banks, to lend to us. The money monopoly belongs to the government and their agents: the banks. The problem then originated, not in the private sector, but the public sector.
Why would government allow banks to act illegally? To literally steal money? Simple, the banks will earn huge profits on illegally being empowered to steal money. These profits will be subjected to taxation. Thus, once again, government finds, or creates another device to steal your money sub rosa.
True, the bubble bursting and the resultant recession did create government tax shortfalls, which validates the previous paragraph, and these tax shortfalls led to massive government deficits, as, government expenditures exceeded government [tax] income. So true, the government deficits are a result of the crisis, but, the paragraph is highly misleading in absolving government as to the causation. In fact a gross distortion of the truth.
You have to wonder at the ethical base of these economist chappies. Are they outright liars? Or just plain fucking stupid? Which one is more worrying, that we are being manipulated by thieves and liars, or cretins?
There is plenty more to come, jump to the entire article, or, if you have time to waste, download the entire pdf.
July 19, 2012 at 11:38 am
Sorry to have been ‘inactive’! Was teaching, mainly. Glad to have directed you to something interesting after so long. Should be much more soon!
Hold on a moment, though. Are the banks both creating money and then stealing it? I would have thought in your philosophy that the act of creation would give them ownership. So any acceptance of it at interest is simply fair exchange, is it not?
July 20, 2012 at 7:03 am
Dr.D,
As you well know ‘fractional reserve’ banking is the creation of a loan from a demand deposit, the contract for which ownership of the money deposit is not transferred from the depositor to the bank.
The banks therefore create a loan, creating a reserve, of X%, and a new deposit [the loan] that perpetuates another new loan from the deposit.
The banks, can, with the tacit approval of government create a credit/money expansion via demand deposits, a fiduciary money.
This ‘creation’ is theft, as each new money unit dilutes the existing money supply, money being the universal unit of exchange for all other goods and services, which, the bank can now bid the prices higher, as they do not need to create goods/services, they simply create new money.
This is only possible because of government approval of this theft, through the support of a Central Bank, that, will in the event of demand for deposits exceeding the reserve, supply new money [liquidity] to the insolvent bank.
So theft.
jog on
duc
July 20, 2012 at 8:40 am
No – reserves can only be obtained from the central bank/government.
No, not necessarily.
But then, we’ve been there before.
July 20, 2012 at 9:14 am
Dr.D.,
Indeed each new money unit created dilutes the existing stock of money…”necessarily.”
While Central banks certainly do create reserves, fractional reserve banking, as its name suggests, also creates reserves.
jog on
duc
July 20, 2012 at 7:07 am
Dr.D.,
Teaching were you. I hope you are not teaching that Keynesian nonsense. Although as I remember you are not a Keynesian, nor Chartalist, nor possibly even neo-classical. What ‘style’ are you teaching?
jog on
duc