May25
Some time back a YouTube Channel “ProfSteveKeen” was established to collate my video interviews. It’s been inactive since then, but recently Sydney writer/director and multimedia reporter Benny Sutton–who has more than a decade’s experience in filmmaking and Australian broadcast journalism–volunteered to produce professionally recorded, regular “Vidcasts” on a range of topics.
The first two, on whether the US economy will experience a “Double Dip”, have now been posted to YouTube; you can watch them below, or via subscribing to the YouTube Channel.
PeterJBolton,
Yes I agree and I also have my own experience with a “Collective”. What is really interesting is something rather different – not the power of brainwashing of a group which is able to intellectually, emotionally and morally swallow and digest (dissolve) an individual (something what I personally experienced 30 years ago in the form of religious faith but I was lucky to fully recover).
But most of the people just don’t care and follow the herd. They are not fanatics.
What I re-discovered recently is the negative power of the collective wisdom – average, lazy, greedy and half-educated people claiming to be our intellectual leaders, reproducing and magnifying meagre memes and disposing of valuable ones. Some people are just corrupt and dishonest but these are relatively easy to spot. It is the majority of the “normal” and “decent” people who lubricate the system.
As a result the most of our culture is intellectual rubbish.
I find really fascinating how pieces of information, memes and ideas are transmitted and processed by a human society – and how they (like parasitic creatures) transform the host – that is us, individuals and groups of humans. We keep repeating phrases which lost their original meaning but these phrases actually constitute the stream of our group consciousness which is rather a group illusion.
I could give a detailed example here but this would not fit into the format of Steve’s blog and might actually personally offend some readers.
Actually this process also happens on a wide scale in the so-called academia among economists (and other scientists, too). No group is immune to being settled at least temporarily by hostile memes because hosting distinct memes is what makes humans to form separate groups in a modern society. There is an assumption that the academic environment provides conditions where mostly good memes survive and multiply. I don’t think so. The negative selection and the survival of the ugliests also affects that pool of memes.
Being a heretic may only lead to the “salvation” or rather “anti-salvation” (in the religious sense) of an individual. The society is generally beyond redemption but this doesn’t make watching these phenomena less interesting.
@ Ak May 29, 2011 at 4:58 pm | #
“But most of the people just don’t care and follow the herd. They are not fanatics.”
The issues of the characteristics and nature; hence behaviours surrounding the ‘Individual vs. The Collective’ are vitally important in the socio-economic issues but the investigation must be entered from natural physics.
Simply put, to found the ‘Individual’ towards that which is his ‘accomplished self’ or homo sapien sapien is as Campbell puts it, The Hero’s Journey where as the ancients put it, and which is blatantly obvious, the answers lie within each individually uniquely. This is the natural ordering of the measure between Cause and Effect whereas the Effect is the accomplished man, or the intended Man being the function of the originating Cause.
It is when this ‘Journey’ is surrendered to the ‘Collective” as an offering for forgiveness of the “original sin” that the Hero is lost to become one of the army of the ‘living dead’. Or, he can become the “true believer”, the sword bearing priest, or just one of the faithful and obedient servants, etc., or whatever the Collective accepts him as.
The nature and characteristics of the Collective on the other hand are found in the synthetic composition of the sum aggregated energies of the mentalities surrounding the paradigm upon which the Collective is built. The Collective demands the surrender of the Individual, from which is organized a new paradigm arising out of but far greater than the sum total coherences of those Individuals making up its mass. In other words, the Collective has its own attributives and despite the fact that one man or a number of men are in control of the ideology, these men are not permanent, a priori.
The Collective is a feedback looping self serving and driven parasite; a single celled amoebic life form that like any biological phenomena, places survival as its greatest function and while it is internally symbiotic and social it is equally at home at shape shifting and strong agile chameleon tendencies an analogical related to fungi candida, the cancer producing fungus that habitats in humans.
You may blame a CEO of a large corporation or a Governor of a Reserve Bank for screwing the public, but that which you blame is an agent of his Collective; a captured soul, as it were; but one that willingly surrendered his Journey in order to serve the Beast (Collective), or as the ancient abhorrents put it, ‘sold his soul to the devil; a Hero lost. Please note that most people accept being screwed by all the “Collectives” because they think, as they are trained to think, that they wil get something, which most never do; except a worthless death.
“Being a heretic may only lead to the “salvation” or rather “anti-salvation” (in the religious sense) of an individual. ”
You are obviously looking from the “Collective’s” perspective.
“only”?
There is an old say: “Today’s heretic is tomorrow’s conservative.”
The choice is:
I. To be-come yourself
or
II. To serve a disease.
I do not want to take you, or anyone else away from Steve’s Blog – and these Blog activities certainly build huge followings (Huffington Post, Zero Hedge, Mish, Denninger, Big Picture, Naked Capitalism and Roubini for a few examples) but if you feel like commenting on something that you are uncomfortable at doing so here – you would be welcome at verbewarp. However, Steve’s Blog is important for Australia as his academic and energetic approach is unique (and heretical) and this is exactly what Australia needs, that it, to break the Colonial Penal Colony mentality cum paradigm – or Stockholm Syndrome of the Australian people.
When it boils down to the condensate, the Collective teaches all its parts to suck from its paps – this is how it survives and breaking from this addiction, requires courage and the need to face death without fear.
You have to break from the emotional personification streaming and head into ‘natural physics’ for your analysis.
@AK
“”Practices of the unscrupulous money changers…”
We are very deeply conditioned.
There is a question that I would like to pose which is open to all….
“Just who are the money changers?”
Hint: Look in the mirror.
We expect “interest” on our bank deposits do we not?
Hi Steve,
If you are seeking a broader audience for a video, may I suggest that you elaborate a little on “…equals GDP plus the change in debt” (ie it’s minus if the change in debt is negative) and also on the differentiation of this equation. Those of us that have done a little calculus can see it without thinking, but it will just be blah for many who might otherwise understand.
Cheers
@ Peterjbolton May 29, 2011 at 6:33 pm | #
I would like to add to my previous post that the “Collective” is as “fiat currency” – unsustainable – as is evidence in the written record of over 2 millennia.
Only the “Individual” is sustainable by proof of evidence in full term.
And, whereby Governments have been degrading currencies consistently for more than 2000 years – they used to call it “clipping” – today they call it “inflation” – it is carried out by the “True Believers” aka Governors of Central Banks – on behalf of the temporary Generals of the Collective Command.
Today, the game has a bias: the play is to save the “status quo” in the form of the banking system. It’s an “end game”.
I doubt that the shape of the electron itself is perfectly spheroidal, but accept that its chromosphere is normally spheroidal. Structure adapts to function.
Ak May 29, 2011 at 11:35 am
Let me just say that I disagree fundamentally with Wray and with others about the role of saving, the paradox of thrift etc. I’m very disappointed with Wynne Godley’s work, even though he saw 2+2=4, whereas many in the mainstream thought of something else. Godley might have seen the GFC because he was meticulous and saw somethings did not add up. I emphasize that I’m not demeaning Godley’s very important contribution: it is essential to be consistent when you are doing arithmetic (when many others have been inconsistent).
You cannot ignore money and credit in modern economic theory, as neoclassical economics has been doing. Minsky saw the deteriorating quality of credit as a cause of financial crisis, which is not inconsistent with the Austrian view of the business cycle. Neither Godley and Lavoie (from their book) nor mainstream monetary economics has any concept of credit default, which a central cause of modern economic crisis.
I have not yet read a satisfactory or compelling theory of credit. This may explain why Bernanke (and many other schools of economics) thinks it is perfectly acceptable to print money to save the US and global economy. At least there is nothing compelling theoretically to oppose their actions.
It would take me far too long to justify my view here. But let me leave you with just one apparent observation: countries which have been running down their savings (e.g. declining savings ratios) have been in the greatest financial mess. The fiat money system is a Ponzi scheme. It will become more and more self-evident over time, as a Ponzi scheme must end.
Well, reality has set in, in Perth and Melbourne at least.
My friend is selling his house in Melbourne. Had it on the market for 3 weeks at $750k and has dropped the asking to $690 cause he had no offers and limited viewing. Thats 8% drop.
As for my uncle, well he had his duplex in Innaloo, Perth going for $530 for only 2 weeks and is now asking $490. No wonder when you look at the amount of property for sale just in this one suburb. 7.5% drop
@AK
“It was never my intention to defend the fraud and the fraudsters.”
The system was fraudulent well before the GFC. This is based upon first principle analysis. The law does not regard something as being fraudulent even if it is. It is a “myth of law”.
“The key to the growth in industrialised fraud was obviously deregulating the finance industry – inviting foxes to guard the hen-house.”
With respect – I think you need to study relationships in history more and pay attention to my previous comment.
Here’s something for you to think about…
I consider it necessary to have loans based upon a clause to repay with something other than “monopoly money”.
Just for clarity. Imagine that I loan you 1000 money tokens that you can use to buy 1,000 kg of wheat at today’s prices in your environment. I state I wish to receive 10% interest.
You should be able to repay me with money tokens, wheat or a mixture of the two.
For simplicity. After one year I can give you 550 money tokens and 550 kg of wheat.
The reason is for the curse of “P+I” is always greater than “P” and the “I” was never created. This form of contract is particularly of importance depending upon the relationship geographically and otherwise of the lender and borrower.
And yes I am fully aware of Mr Keen’s models as discussed in “Solving the Paradox of Monetary Profits” and other publications.
Ferb
Here in the UK a person I know had their house on the market at 320,000 GBP. After several months they had reduced it in stages to 250,000 GBP.
Is that nearly a 22% drop?
I would rather say that the “sale price” (gee when I look at those words it appears to be a contradiction) was just a “cooked up” figure based upon “pushing your luck” and not really a “market price” at all.
IWO if somebody had bought it at 320,000 they would either have been..
1) a fool (?)
2) a banker (don’t laugh I know of incidences where somebody who worked developing properties for a banker was doing this).
They had 1 person come to look at 250,000 and after about a further year they took it off the market.
What I am trying to suggest here is are the prices you mentioned “banker prices” or just the “usual over-inflated prices”?
@AK
Could I suggest that you read all of …
http://www.howitends.co.uk/
I will not point to any specific pages – just like a meal that has a “flavour” – that site has a (certain) flavour also.
If you decide to read it may I remind you not to expect that anything to be 100% correct.
You may even contact the webmaster ? (p.s. it is not my site).
I may respond to the comments in detail a bit later.
The point about defaults is valid and if we look closer there are more gaps in the G&L book but W. Godley is no longer with us and it is up to the others to fill up all of them.
It can be shown that in a country not running current account surpluses if the private sector is a net saver, the government sector must be in a deficit. If the government does not “print” money the non-zero saving rate of some private agents can only be satisfied by negative saving rate of the others (rising indebtedness) – what exactly corresponds to one of the root causes of the GFC.
At some point when restrictions on credit creation were relaxed (see above), borrowing to speculate on real estate and equities markets kicked in and the growth of the debt accelerated what led to a collapse.
If we not only get rid of the active government role but also remove creation money by credit then we will end up with a stockpile of gold in the hands of a few rich people and with the rest of the population lingering in extreme poverty due to rampant deflation. A visit to Continental Europe and tour of magnificent medieval castles and churches – and then reading about serfs and serfdom should convince everyone that this was the historic reality.
I am not sure whether we can or rather should imagine a system without a modern government playing an active economic role. My view is rather that our current system based on fiat money is not a Ponzi schema but could be the least evil if maintained properly.
Zero interest rates (on the interbank market) have been proposed by noone else than Warren Mosler. The article is worth reading because it also contains a concise presentation of the Chartalist theory of money – again, it may not be a theory of everything but it is worth reading:
http://www.epicoalition.org/docs/Forstater_Mosler_article.pdf
Finally, the rising quantity of money does not cause inflation – this is a monetarist red herring – otherwise both Japan and the US would have experienced hyperinflation by now. Our attention is distracted by the mainstream media talking about sovereign defaults and about inflation while virtually nobody pays any attention to what Goldman Sachs and the others are doing right now. We are in the “business as usual” mode.
The only issue is that the West will be overtaken by the developing countries implementing the “it doesn’t matter if a cat is black or white, so long as it catches mice” policies. Europe in the middle ages was not the centre of the human civilisation.
Ak May 30, 2011 at 9:54 am
More academic nonsense from Forstater and Mosler, I would say. (The same gendre of nonsense as lending and borrowing rates are equal in capital asset pricing theory.) Yes, in a fixed exchange rate situation, the interest rate of a country reflects the probability of default (eg, Greece now). But in a flexible exchange rate case with a fiat currency (no possibility of voluntary sovereign default), the interest rate of a country reflects the probability of loss in the purchasing power of the currency. The rising quantity of US dollar is causing high inflation in commodities, eg rising US petrol prices. There is a lag (due to production) before it shows up in general consumer prices, no matter how much you doctor the US inflation figures. The money printing in the US has hardly helped the real economy, but has financed Goldman Sachs in making speculative profits.
CDS, Greece and why the economic devastation (read: the looming Dark Age) comes only to the “unwashed masses” by design.
Or, the hard fate that is about to be delivered to you, courtesy of the management (read: “leadership”).
And Steve, it appears that you have need to compute the credit /debt impulse here too, as it appears massive.
“Then again, the principle of CDS needs to be kept alive at all cost: financial institutions across the globe are buried so deeply in the stuff that they would all die instant deaths if they were taken away, or even their value or worth just doubted. CDS serve to hide debt, and the world’s financials can’t afford for their debts to be exposed. Nor can central banks or governments, for that matter.”
“And so the game remains the same: keep the bankrupt existing system alive at the cost of the people, until the people carry all the risk and all the debt. Looks like a good enough reason for all of us to become indignados. But then, we’ve said that for years now, and nothing has truly changed yet. Guess the game must be played until the bitter end.”
http://theautomaticearth.blogspot.com/2011/05/may-29-2011-honey-i-swapped-greeks.html
@sirius
My point is that the drops of 8% happened in 3 weeks and both properties don’t even look like selling.
I’ll report in a couple of week but i bet my imaginary house, that the prices will be lowered a further 10% in the comng month or 2. 20% more by yrs end.
If my uncle hasnt sold in 3 months he filing!
The panic rot is festering.
@ Ferb May 30, 2011 at 3:38 pm | #
I believe what Sirius was trying to get to was that the expectation or asking price is not necessarily the market value – whereby, the price that you receive in a completed sale – is the market price.
It is clear that the profession of Valuers, now entitled Property Surveyors, has re-written the whole Book on proper property valuation Principles.
Or, expectation has nothing to do with the market, a priori, and should not be quoted as such. In Perth there are houses springing up for sale everywhere and the cockroaches in suits are in a heightened frenzy, scurrying around the streets in hordes.
The quotation of expected prices for houses is something that will come back to bite all the house spruikers in the butt and that includes the Bankers and Government and I am sure is sticking the cold spears of fear into economists and economic bureaucrats. As such, they just show their total ignorance as to what the market is all about – and the basic fact that the market does not respond very well to being manipulated by those who would be kings.
I also see that the “For Sale” sign-age which has usually been, in the immediate past, mostly elaborate, large ,colourful and complete with photographs, etc., is mostly back to basic cardboard details stuck onto masonite. Too bad, for the sign makers.
Gravity?
“I believe what Sirius was trying to get to was that the expectation or asking price is not necessarily the market value – whereby, the price that you receive in a completed sale – is the market price.”
That is correct. I will give you just two examples from France
1) Property on the market for 180,000 euros. The buyer expects to receive (and will accept) 100,000 euros. Of course if somebody is prepared to pay 180,000 then so much the better.
2) House on the market for 115,920 euros. A young couple wishes to buy it, the estate agent tells me the property is really overpriced and after 1 hour of discussion the price is reduced to 65,000 euros. The estate agent explains that after all necessary renovation work is completed that the property is still not a reasonable proposition.
Please bear in mind that you can get a brand new house built in that part of France for approx 100,000 that conforms to all modern energy requirements and that “old ruins” are selling for more than this.
I knew this and it made me laugh at how the frenchman at the garage was telling me how the various foreigners were so stupid to keep buying at these super-inflated prices.
I looked at an old ruin that was on the market at 55,000 euros (recently reduced from 80,000 euros). The estate told me that about 10 years ago the price for that same property would have been about 6,000 euros. These are most definitely not isolated examples as I knew a few people who bought about 8-10 years ago.
(Two estate agents told me that people were still in “boom” mentality even though the market had frozen up).
The estate agent I knew very well is now on the french equivalent of “the dole”. He didn’t make the big profits though – it was his boss who owned a chain of shops and the rumour has it houses as well. Whoops !
I see that Paul Grignon has released a new DVD
Money as Debt III
http://paulgrignon.netfirms.com/MoneyasDebt/MAD3.htm
main site here
http://www.moneyasdebt.net/
(I have not seen any of it as yet).
typo
the estate agent tells me
I meant to write
“tell them”
(and by chance I got to meet the young girl who was doing the asking)
“Dancing is demonstrating” “Dancing is illegal” (the following video is disturbing)
http://www.youtube.com/watch?v=8jUU3yCy3uI&feature=youtu.be
I was watching TV the other evening where Jamie Oliver (an english chef) was going to be arrested if he turned up at a school to talk to the children about healthy eating.
That prompted me to go watch it on 4od. Disconcerting.
Jamie’s Food Revolutio…: Jamie’s Food Revolution Hits Hollywood
http://www.youtube.com/watch?v=tr8Kmq0hC78
” But in a flexible exchange rate case with a fiat currency (no possibility of voluntary sovereign default), the interest rate of a country reflects the probability of loss in the purchasing power of the currency”
only in the minds of misguided central bank board members and governors lyonwiss,
if a central bank pays a support rate for surplus bank funds equivilent to the target rate then we have interest rate targeting by decree.
and like all mad men who issue decrees, its a matter of opinion as to what the target rate should be .
does glen stevens have a better idea of what the current wholesale inter bank rate should be, than you and me.
hind sight tells me probsbly not , since they often over shoot or undershoot the mark.
lets remember if market forces were left to their own devices, large budget deficits lead to surplus funds in the interbank lending market leading to lower interest rates, than under a regime of interest rate targeting by decree
but the initial premise from which such propositions are built are highly misguided.
the fed has printed(god i hate this term) trillions, and not a skeric of inflation in sight,
got to stop beleiving in this supply side nonsense lyonwiss,
helicopter ben is a mis noma,
and when interest rate are hovering around zero, the ability of the fed to cause inflation is sheer mythology.
” The rising quantity of US dollar is causing high inflation in commodities, eg rising US petrol prices”
nearly 3 billion people trying to take their per capita gdp from $4000 US to $54000 US using the same energy model we have used for the last 100 years is causing the rise in commodity prices,
not surplus dollars,
Reality – I think that I have actually already lived through this scenario a number of times: mark these words well.
http://anarchytoday.wordpress.com/2011/05/30/the-state-and-its-pseudo-money-will-collapse-simultaneously/
Ahhh, the “black market” – the great enemy of “leadership” but the survival tool of the “unwashed”
Here tha’r be truth. The coming of the buccaneers and Pyrates: free-traders all.
Hi Guys,
I have been investing since the age of 15.
The set of circumstances i am faced with now i have never experienced in the 32 years i have been doing this.
Bank finance for me has just dried up, a friend of mine has had his $3m line of credit withdrawn.
Friends are short of funds or should i say funding.
I have not got a problem”YET”.
But any thoughts of expansion are on hold.
What i don’t want to see is a folding up of demand for our raw materials.
I lived through a time when NOBODY WANTED OUR IRON ORE, GOLD AND OTHER ORES.
This i fear would shoot us to the top credit default top 10 list.
Mr. Keen could you do a projection or series of financial projections of financial conditions for Australia if our top 10 exports collapsed.
Would we shoulder out the PIIGS?
PIIGS AR AUS??
PIGSRUS?
Please let me know if you can.
I think you have done and dusted the house market in Australia.
Well done.
And thanks
Peter
So who is funding these great Austrian sites?
http://blog.mises.org/13906/whos-funding-this/
If Koch Bro are so efficient and get so much attention for so little money spent maybe I should throw away my “statist” views and convert to Austrianism on the spot as this is a proof that the marginal efficiency of private Austrian funding appears to be far greater than the state competitors.
Never mind who is right or wrong…
@ Mish – Who is to blame?
http://globaleconomicanalysis.blogspot.com/2011/05/europe-at-abyss-us-housing-in-abyss-who.html
“The markets failed. All this would not have occurred if banks in Germany and France had not lent so much,” says economist Desmond Lachman of the American Enterprise Institute. “It was like the U.S. housing market.” Both American and European banks went overboard in relaxing credit standards.
“Markets Failed” Says Desmond Lachman
Comment by Mish:
“Few economic statement make my hair stand straight up more than that bit of complete nonsense from Lachman. The markets did not fail. Bureaucrats who dreamed up the Euro failed.”
My comment: Clearly it is “leadership” that has failed and as a result the current models of statism – within the brew and slews and stews of Fascism. Marxism, Socialism etc., tighten their grip of social controls as desperate measures to have the full burden of payments (for their incompetences met by the unwashed public through the wonderful pain of Austerity-for-all (except the usual chosen ones).
These failed “Leaders” who are having their gross incompetences and irresponsibility’s displayed publically and globally to levels that leave no doubts, whatsoever, are now preparing for a confrontation between “Us & Them” – which is no obviously building like a wild fire before the wind.
Greece is no desperate at the run on the banks continue and fiat is being exchanged for Gold which leaves Greece less Gold and cannot borrow at 25% interest rates while the IMF cannot do its stuff because Greece has technically defaulted. Greece was bailed out 3 years ago and here we are again – to be followed by the other PIIGS + more.
Any doubts as to the trend?
There is no phenomena more prolific that “bureaucracy”.