The Last Link

Way back in the early days of the conservative movement, it was assumed that Federal spending was both unsustainable and damaging to the country. Cutting the size and scope of government was their thing. The tool they eventually settled on to reduce Federal spending was taxes. If they made high taxes so unpopular with the public, the Left could not keep raising taxes. If they could not raise taxes to cover their spending, they would eventually have to yield to the mathematics.

Obviously, that never happened. The big tax reforms of the 1980’s did simplify taxes and lower rates on rich people, but revenues remained stable. At the same time, spending kept growing. One of the unspoken truths of fiscal policy is the percent of GDP that is consumed by Federal taxes does not change much of time. The range is between 15% to 18%, depending on when tax policy was changed. This is the logic of the flat tax. One rate, no deductions and no more IRS.

Spending, of course, keeps going up, no matter who is in office. Despite their rhetoric, the Republicans are the big spenders. In the 1980’s they had to spend on the military to win the Cold War. In the Bush years it was the crusades against Islam. It is only when a Democrat is in the White House that the Republicans get tight-fisted, and even that is mostly ceremonial, as we have seen with the last Covid bill. It turns out that there is no relationship between taxes and spending.

Another shibboleth of conservatives is that eventually the bond markets will force a haircut on the government. The so-called bond vigilantes will drive up interest rates, which will make borrowing more expensive. The theory here is that there is a hard limit on debt. Once that limit is reached, spending must go down or taxes must go up in order to reconcile the books. Like the belief that taxes will curtail spending, faith in the mythological bond vigilantes has been misplaced.

Of course, you can go back further and find arguments from the hard money crowd about the limits of fiat currency. There was an argument in the old days that said fiat currency not only unleashes spending and inflation, but it eventually makes the money worthless, thus bankrupting the state. We have been off the gold standard for a very long time now and none of the predictions came true. The spending continues, the borrowing continues, and the money creation continues.

The gold bugs have now moved to crypto currency as the savior. Once everyone is using digital money that is outside the control of the state, then we end up with a de facto gold standard. That will force fiscal discipline on the state, which means radically reducing spending. The fact that this will never happen has so far not dimmed the enthusiasm, but like all of the other schemes to cut spending, this one will prove no match for the animal cunning of the ruling class.

There is another theory related to money. The monetarists have always argued that sound monetary policy would impose discipline on the state. Since central banks are independent of the state, they can maintain a stable money supply. While not the same as a gold standard, sound monetary policy has similar effects. That has turned out to be a myth as well. The Fed is now captive to the spending frenzy of Washington, finding new ways to underwrite trillions in new outlays.

Now, there are those who will keep lighting candles for their favorite theory. The gold bugs, for example, are sure hyperinflation is around the next corner. The bond vigilantes are similarly sure the next crisis will confirm their theory. The truth is though, none of these theories turned out to be true. The official debt is $28T, but that excludes things like Social Security. The real debt obligations of the Federal government are incalculable. No one knows and no one seems to care.

The lesson of the last half century is one the monetarists learned from the battles over the gold standard. If the ruler is so corrupt you need hard money to control him, your ruler is corrupt enough to find a way around the limits of hard money. It turns out our rulers are more than capable of conniving around every limit put before them. They have reached levels of corruption that were though impossible half a century ago. The display being put on now suggest they are just getting warmed up.

This rather shabby track record should raise a question. That is, is the field of economics just pseudoscientific nonsense? It has lots of complexity and lots of very clever solutions to the complex problems it unearths, but outside of the most basic of concepts like supply and demand, economics is not very useful. In all of the important things, it turns out to be wrong. Astrologers have a better record than economists, because they know they are grifters, not scientists.

Putting that aside, the lesson here is that contra the libertarians, economics is downstream from politics. No amount of fiddling with the tax code can fix the defects of the political class. Even further, the right people in a corrupt system cannot correct the defects of the corrupt system. This is why the people come and go in Washington, but the corruption rolls on unimpeded. In the great chain of causality, economics is the last link in that chain. It is the final effect of a chain of many causes.


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Cloudswrest
Cloudswrest
3 years ago

Two suggestions on why we have not experienced hyperinflation with all this money generation.

1. The “techosponge” https://www.singularity2050.com/2010/07/the-technosponge.html

2. Much of this money is going to capitalize the entire third world. Instead of inflating the dollar it’s deflating domestic employment.

Steve in Greensboro
Member
3 years ago

America has been able to inflate the USD without immediate material consequence because she has been the global hegemon since at least WWII. Today America is in the process of losing that status with the rise of China and the transition to a world without a single power node. Once that happens, the USD and the FedGov debt will begin to collapse in value and interest rates rise. As of February 2021, the US FedGov’s debt is USD 26T while the US GDP was USD 21T. It won’t be repaid, not even by further inflation. America will certainly lose its… Read more »

imbroglio
imbroglio
3 years ago

There remains the problem of getting blood from a stone whether you borrow it, print it or steal it..

Maybe the reason why the “crack up boom” (von Mises) hasn’t happened is because the world has a greater store of unconsumed capital, material ,and intangible, that even Peter Schiff has imagined. So the law of supply and demand may well be in effect, its rain falling on the woke and the anti-woke alike. It just needs more time to assert itself in its indifferent cruelty.

My Comment
Member
3 years ago

It is hard to impossible to predict what will happen economically when your country is ruled by people who hate the populace and do well in any economic situation. The tribe prospered during the Weimar Republic until the most evil man in history lead a rebellion

JR Wirth
JR Wirth
Reply to  My Comment
3 years ago

Once you have demographic changeout, there is no future. CA has no future the way a white person would want it.

My Comment
Member
3 years ago

Like everything else economic theories are a belief system not reality. Goldbus worship gold as a God. As Z notes, they have been predicting hyperinflation forever and will always do so. Eventually they will be right. The crpto worshipers are convinced crypto will bring about economic paradise. Everything is rigged and corrupt. All we can do as investors is to try and understand what game is being played and play it too with the knowledge we are not privy to all the schemes and data of the ruling class. The mere fact that members of the tribe have won so… Read more »

Mugabe Mugwumps
Mugabe Mugwumps
Reply to  My Comment
3 years ago

Prices are up because the government has been printing more dollars. Hence demand for hard backup currencies like ammo and silver. It’s really not that complicated. Look at Zimbabwe.

The g man
The g man
Reply to  Mugabe Mugwumps
3 years ago

Absolutely right. Also, Z needs to do his home work. Fed spend was last below 18 percent in 2001. It was last below 15 percent in 1951. Obama had it up to 23 percent.

https://www.govinfo.gov/content/pkg/BUDGET-2016-TAB/pdf/BUDGET-2016-TAB.pdf

Joe Blow
Joe Blow
3 years ago

It’s kind of sad that even in this forum so few people understand that the answer to these problems are to be found in bitcoin. Bitcoin is the hardest money ever found and and will eventually slow and then finally stop this bullshit. Fixing the system is not possible so it has to be bypassed and that is exactly what bitcoin does. Yet, EVEN HERE we get stupid comments by some complaining about its energy use yet this is exactly what makes it by now, impossible to stop ( though they will try ). Geezus people, just google ‘Why bitcoin… Read more »

Hi - Ya!
Hi - Ya!
Reply to  Joe Blow
3 years ago

How can you invest in bitcoin?

Joe Blow
Joe Blow
Reply to  Hi - Ya!
3 years ago

Understand WHY you are doing it first. It isn’t an investment – it is a REVOLUTION perfectly disguised as a get rich quick scheme. Extremely surprised the theZman isn’t more into it myself. There is a TON of info out there, just avoid the mainstream negativity and ALL SHITCOINS. Do your own research. Twitter #Bitcoin will get you started but don’t buy for profit, buy for the privilege of helping to take down these f**ckers.

JohnWayne
JohnWayne
Reply to  Joe Blow
3 years ago

If government, hackers, Russians, Chinese, CIA, some wiz kid, decide to, they will destroy, control, steal, or regulate crypto. The weak link is the internet. Buy ammo, bourbon, land with well water, silver coins, gold coins, books, tools. vegetable seeds, chickens, go solar.

Joe Blow
Joe Blow
Reply to  JohnWayne
3 years ago

Yet more FUD. Please stop conflating bitcoin with ‘crypto’. There are a lot of scams in ‘crypto’ but bitcoin is the real deal. NEVER been hacked, uptime nearly 100% except for a few hours when it was first starting.. On ramp to bitcoin is regulated but bitcoin itself can’t be regulated. Totally decentralised and now 1 trillion in size. So many uses that any country that tries to ban it will be laughed at soon enough. Sure, the things you mention are important but being able to cross a border with some of your wealth IN YOUR HEAD if necessary,… Read more »

Forever Templar
Forever Templar
Reply to  Joe Blow
3 years ago

That all sounds fine and dandy until, ya know, the gov’t decides Bitcoin is illegal.

Joe Blow
Joe Blow
Reply to  Forever Templar
3 years ago

Many governments have tried to ban bitcoin but have soon backtracked. There are MANY people in government who are bitcoin fans. This is ALL FUD and it makes me wonder if people here are serious about fixing things or are just resigned to collapse. Governments could ban gold too, and guns – what will you do then? Just tell them to FO? Well why wouldn’t you do that with bitcoin?

Alex
Alex
Reply to  Joe Blow
3 years ago

ell oh ell.

Just like BTC, NFTs, and the US Dollar, none of this is real.

Joe Blow
Joe Blow
Reply to  Alex
3 years ago

DeFi is coming, like it or not. Lots of scams so its hard to see what’s up. BTC is the real deal though. Decentralised, digital gold – the hardest money ever. Had a virgin birth, all other ‘coins’ are likely scammy, even if ‘useful’.

Forever Templar
Forever Templar
Reply to  Joe Blow
3 years ago

Bitcoin is only as “real” as to the extent people are willing to use it, which in itself is totally dependent upon there being electricity to use. lol, what if the power goes out for weeks at a time? Months? No reliable power for years? Yeah, US infrastructure is deteriorating and rolling blackouts are already real events in some places. Imagine during a boogaloo you go to meet someone in some dingy back alley to negotiate for food and vitamins and all you can bring is a flash drive. “But, bro, the crypto on this is will totally cover this!”

Joe Blow
Joe Blow
Reply to  Forever Templar
3 years ago

If the power goes out for weeks at a time you have more problems than that. Bitcoin is NOT designed to help you buy some food when you are starving, so yes, other things are also necessary. It is designed to protect part of your wealth from confiscation so that worst case you can just leave and start a new life. Try doing that with a bar of gold – most people would last a day. Bitcoin can be stored in your HEAD.

Clo
Clo
Reply to  Joe Blow
3 years ago

“Bitcoin” is only an embryo in what’s being worked on in the crypto-currency field. It’s major problems are: 1. It doesn’t scale very well. It only supports about 100 transactions/second. Visa does 100,000 transactions/second. It’s not practical to buy beer with bitcoin. This is being worked on with sidechains and the lightning network. You need a “blockdag” (directed acyclic graph), not a blockCHAIN. 2. There is too much private information on the blockchain. Bitcoin is NOT fungible. It is subject to a “blood diamond attack”. That is if enough miners agree that certain bitcoins are “tainted” due to their history… Read more »

Paintersforms
Paintersforms
3 years ago

In different translations of the Lord’s prayer, I’ve seen the same word translated as ‘debts’, ‘sins’, and ‘trespasses’. So I guess debt is sin, which would explain why the world today is addicted to it.

Maybe debt is like tyranny: we’ll have as much as we’ll put up with.

Paintersforms
Paintersforms
3 years ago

Pie in the sky I realize, but why not a national sales tax? It’s more legitimate than taxing labor and it puts corporate and government interests at odds. The market god would be angry of course.

JR Wirth
JR Wirth
3 years ago

https://www.foxnews.com/us/derek-chauvin-trial-george-floyd-drug-use

Aww Sheeeiit. George had a white girlfriend. What percentage of Shanequas just tuned out and stopped caring about this? And how sad is it that white women are so available to drugged out porch monkeys? Even if they’re lower tier white women. Drugs….

Bilejones
Member
3 years ago

I guess this should be posted under : “It’s hard not to laugh”.

https://patch.com/maryland/baltimore/15m-johnson-johnson-vaccines-tainted-made-baltimore-report

DFCtomm
Member
3 years ago

Modern Money Theory works, and that can’t be denied now. Money is nothing but the numeric representation of faith. It’s not just tradcon Americans that believe in America, but even our enemies believe in us and use our currency. However, the moral hazard inherent to MMT is also real. Nothing breeds failure like success, and if a little is good then a lot is better. The COVID crisis will test the upper limits of MMT and I believe it will fail, and when it does it will be spectacular. That’s the thing about faith. It’s powerful when it’s on your… Read more »

JR Wirth
JR Wirth
Reply to  DFCtomm
3 years ago

We’re not yet doing MMT, although it feels like it. The Fed is still creating bank reserves and crediting the government. MMT is a total bypass of this process. We’re definitely going to do it though at some point.

Whiskey
Whiskey
3 years ago

Palace Economies work. Until they don’t. Before money, a Palace Economy was all there was. The King or equivalent controlled all the wealth, and labor, and would divide it out based on needs of the kingdom, war, etc. This worked reasonably well for a very long time: Babylonia/Mesopotamia, Egypt, the Mycenaean kingdoms, etc. The Bronze Age got along quite well. But it was fragile. Without the king and his men enforcing it, laborers many forced did not maintain the irrigation systems for other men’s crops. Nor would traders show up with ships filled with tin needed to make bronze. What… Read more »

Rwc1963
Rwc1963
Reply to  Whiskey
3 years ago

And SOCOM is our military’s crown jewels so to speak. If they go PC/MC our ground forces will be seriously crippled. Most empires through history did everything to keep their military strong not deliberately weaken it.

.

Ben the Layabout
Ben the Layabout
Reply to  Whiskey
3 years ago

This isn’t the place to delve into the “Ancient Astronaut” wild theories of such authors as the 1970’s Erich Von Daniken and similar. Yet, these books and videos, stripped of some of their more sensational science fiction claims, pose valid questions. The fact is, that the ancient Egyptians built some damned impressive pyramids that can be explained — just barely — in possible methods of construction, even by Bronze age technology and manual labor. The exact methods used are unknown. Even more mysterious are some of the edifices of the Americas. We of European descent may look down our noses… Read more »

Chacotaco
Chacotaco
Reply to  Ben the Layabout
3 years ago

The stones in many cases were built with geopolymers cast in place, hence the perfect.joints.

AnotherAnon
AnotherAnon
3 years ago

Where is the bottomless pit spending going? It’s going into the stock market … and massive asset inflation. New highs daily, in spite of lowered economic activity. This has been the case since the housing crisis bubble popped, because for the first time, no readjustment was allowed to occur. And the interest rate of zero (or near zero) keeps the post-2008 magic act going. Biden announced he has a goal of transferring investment capitol from savers to the underserved community. What does that even mean? Sounds like research and investment funds are being redirected into consumption. The future is being… Read more »

Rwc1963
Rwc1963
Reply to  AnotherAnon
3 years ago

Yep. And since the lockdown consumer spending has went into the toilet. Contrary to Trump’s BS our economy never recovered. For example I like to point out to people that I live near a major Union Pacific rail line that ships Asian goods from the port of Long Beach to the East. Before the lockdown there was on average one Intermodal train(with means shipping containers and trailers) going Eastward every hour. Today there are maybe 4-6 freight trains going in either direction every day. Consumers are not spending because employment has been decimated by the lockdown. And because the Feds… Read more »

Jack Dobson
Jack Dobson
Reply to  AnotherAnon
3 years ago

There will be no peace. Assets from the powerless can be taken fairly easily but that will run out soon enough.

You perfectly described the currency devaluation underway and asset inflation. The main question is “why?” There is no good ending for anyone, which forces the conclusion the Ruling Class is insane and has bought into it’s own grift narrative.

Infidel1776
Infidel1776
3 years ago

Thomas Carlyle called economics “the dismal science.” Sounds about right.

JR Wirth
JR Wirth
3 years ago

Unrelated Post:

https://www.nytimes.com/2021/03/31/us/politics/johnson-johnson-coronavirus-vaccine.html?smtyp=cur&smid=tw-nytimes

Baltimore still has manufacturing??? I thought it was just a big drugged out ghetto brothel with Johns Hopkins and Legg Mason in the center. I wonder what color the employees were that made this screwup?

Ben the Layabout
Ben the Layabout
Reply to  JR Wirth
3 years ago

Yep, I was suprised too. If you drive through the downtown area without stopping (which is probably the best way to “see” Baltimore any more), among the other decrepit old industrial detritus, you’ll see a “Domino Sugar” sign. When I would visit (the 1990s) I thought “another long gone factory.” I was wrong. The sign is over half a century old and clearly unmaintained*, but it turns out that they they in fact, are still in business and a major downtown employer in what is otherwise an urban cesspool, one of the few that bucked the abandon the city trend… Read more »

nesalpers
nesalpers
3 years ago

My mental model of fiat currency and gold has always been that both are commodities. However, that model isn’t working. The price of just about every metal has recently doubled. Part of that is due to steel mills shutting down, part of it is due to disruptions to industry, but part of it is just inflation. So copper, steel, aluminum – they’ve all gone up. Gold has gone down. What the hell?! Does anyone actually understand what’s going on with gold? Because I apparently don’t. I don’t see how market manipulation could take any form other than someone dumping gold… Read more »

Drew
Drew
Reply to  nesalpers
3 years ago

Stimulus and bailouts have given lots of people lots of cash to spend. The shut down has cut off a lot of outlets for spending. Beyond that, there’s probably some wacky and nefarious stuff. However, extra cash with fewer purchasable goods generally leads to increased prices.

Maus
Maus
Reply to  nesalpers
3 years ago

Lots of money flowed to gold when bond rates were tending toward zero or negative. The thinking was that, if neither produces a cash flow return, gold at least preserves value and hedges against inflation. But as the ten-year rate inches up and the expected inflation from trillions of dollars of stimulus fails to manifest, that capital is leaving gold and returning to bonds. What flirted with $2000/tr. oz. six months ago has retreated by several hundred dollars. The folks who are really gonna get spanked are those who bought the miners, like Barrick, hoping to get both a dividend… Read more »

Max
Max
Reply to  nesalpers
3 years ago

What you deem “price” of metal is a fiat derivative(futures)
Those contracts can be rolled indefinitely and do not represent actual physical assets

So it’s easily manipulated by main players. And it will work as long as current system keeps functioning

Potential breakdown is if real shortages start. But for that something big needs to happen

trackback
3 years ago

[…] ZMan counts the beans. […]

Stranger in a Strange Land
Stranger in a Strange Land
3 years ago

I suspect that when the chinks decide to demand payment on all the bonds they hold, or they simply stop buying them – then economics will be retethered to reality.
Also (not sure if it’s an actual econmic theory) but the axiom that the higher the climb, the harder the fall will be proved.

3g4me
3g4me
Reply to  Stranger in a Strange Land
3 years ago

Stranger in a Strange Land: Your comment led me to research the difference and preferred usage between proved and proven. So I’ve already learned something today even if it had nothing to do with economics (both are past participles, modern American usage prefers proved, and my use of proven is probably attributable to my heavy reading of British literature).

Stranger in a Strange Land
Stranger in a Strange Land
Reply to  3g4me
3 years ago

3g – perhaps a bit pedantic, but the proof is in the pudding, and you have proved to me your proof reading is correct and has proven to be enlightening.

Drew
Drew
Reply to  Stranger in a Strange Land
3 years ago

Maybe, maybe not. If the chinese call the loan, the government can tell them to take a hike and not pay. If they stop buying, well that just leaves more for the fed, who’s the largest purchaser anyway.

Compsci
Compsci
Reply to  Drew
3 years ago

The Feds can not continue to “make the market” wrt federal debt. If there are no other purchasers, then the “scheme” falls apart. So farther other countries have stepped up to buy significant quantities of our debt as well as US citizens, so all appears well. How long that lasts is the question.

dr_mantis_toboggan
Member
3 years ago

Unlike physics, the laws of economics are as malleable as thin sheet metal. I used to be worried about spending, debt and inflation. I don’t know what to think of it now that a multi-trillion “rescue package” of nonesuch designed to reward connected cronies seems to appear from Congress every few months. We just passed the Biden one and now his handlers are talking about an infrastructure one larded up with plenty of pork for the Ruling Class and their supporters and none of the real infrastructure that would actually make sense. I remember when FDR built an aircraft carrier,… Read more »

Lady Dandy Doodle
Lady Dandy Doodle
Reply to  dr_mantis_toboggan
3 years ago

Stephanie Kelton’s book on Modern Money theory explains it all.

KL
KL
Reply to  Lady Dandy Doodle
3 years ago

She’s a SWPL who called Trump racist, so even if her economic ideas are 100% accurate, no one on the right will listen to her.

Lady Dandy Doodle
Lady Dandy Doodle
Reply to  KL
3 years ago

I am afraid you are right. Wouldn’t MMT be great in an all white land, though? 🙂

DFCtomm
Member
Reply to  dr_mantis_toboggan
3 years ago

No use to worry now. We’re past the point of no return. You can’t be destroyed by debt twice as hard, and so debt simply doesn’t matter because a default is inevitable.

Jack Dobson
Jack Dobson
Reply to  DFCtomm
3 years ago

I would like to be able to upvote this a thousand times. That the United States will default is backed into the cake. As posted above, the endgame remains uncertain unless this is Ruling Class madness, which it may prove to be.

Ben the Layabout
Ben the Layabout
3 years ago

Agree with most points in the essay. Even somewhat down from its record high in 2020, gold is currently at about $1600 per troy ounce. Just for reference, that is about 40 times the “official” price when we abandoned that last vestige of the gold standard, fifty years ago. The last time the USA had circulating gold coins (1933), about 80 times. Gold is grossly overpriced in relation to the Dollar’s overall depreciation over those time periods, perhaps by a factor of three or four in terms of real-world goods it can buy. The hard money people are right, in… Read more »

Lady Dandy Doodle
Lady Dandy Doodle
Reply to  Ben the Layabout
3 years ago

Stephanie Kelton’s book on Modern Money theory explains it all.

Compsci
Compsci
Reply to  Ben the Layabout
3 years ago

Gold has only briefly fallen below $1700 in the last several months, but that is not a reason to buy or sell. Gold is a hedge, not an investment. Keep some for emergencies and backup. But if you want returns, try something else.

Alex
Alex
Reply to  Ben the Layabout
3 years ago

Hard money, soft money, fiat money, BTC… if the king demands tax payment in a certain denomination and pays his soldiers in that denomination, then that is the hard money.

Lucius Sulla
Lucius Sulla
3 years ago

One rule of thumb is to assume everything will ebb and flow with the Boomers. The US economy, and by extension the western economy, has basically been run to benefit the Boomers since the 1970s. The inflation of the 1970s benefitted the Boomers at the expense of others, as the Boomers were in their early earning years, maybe paying down some student debts or 1st car loans, buying their first home. While some would say that high nominal interest rates due to inflation were punishing, if buying your 1st home, those high nominal interest rates also depressed home prices and… Read more »

Compsci
Compsci
Reply to  Lucius Sulla
3 years ago

But who inherits the Boomer’s money? Bloomberg recently estimated it at $62T—up from $42 before Trump. Answer: The very Millennials you say are fed up paying off debts.

The real problem is one of demographic change—not generational change. The oncoming generation is predominantly non-White and unable to earn sufficient wages in our increasingly technological society —for a variety of reasons, not all the fault of Boomers.

Misanthrope777
Misanthrope777
3 years ago

The lesson of the last half century, is that America is fucked. And by proxy, the rest of the west. The disease comes from America. You’re spreading it everywhere. Leftism is killing us.

3g4me
3g4me
Reply to  Misanthrope777
3 years ago

The disease may be coming from America now, but I believe it could be argued it originated among a particular ethnic group, a key cohort of whom emigrated to America along with their destructive critique of White Western Christian civilization.

Rwc1963
Rwc1963
Reply to  Misanthrope777
3 years ago

It’s a result of European Jewry who gave Marxism and Post-Modernism. The latter came to the states in the 60’s through the works of Derrida and Foucault and was eagerly embraced by our Ivy league schools. So our elites got infested first. The rest as they say is history.

The West would be well served if our intellectual class was eradicated given the damage these spindly freaks of nature have caused.
.

TomA
TomA
3 years ago

There are some laws of economics that function like gravity. First, if printing fiat currency ad infinitum were never a problem, then the US Treasury & Fed could make everyone in the US an instant millionaire whenever the natives got restless. Just direct deposit the funds (bribe) and problem solved. That they haven’t done this yet suggests that no one believes it will actually work. Second, no one can predict the future with certitude, so if or when we collapse will always be an unknown. But what is always known is that if you can grow sufficient food in your… Read more »

Damian
Damian
3 years ago

I’ve come to the conclusion now that taxes only serve the purpose of convincing people that their currency is sound.

Higgs Boson
3 years ago

Trees don’t grow to the sky. The birth rate can’t keep up with the mountain of debt. The swamp grifters operating the mechanics of this money laundering operation some call a “government” will have to be held accountable before they bankrupt the nation.

JR Wirth
JR Wirth
3 years ago

“That is, is the field of economics just pseudoscientific nonsense?” – Libertarians have this “Golden Straight jacket Theory” , which is like a magic leaf in a video game that overrides big government. I’ve had a couple professors who believed this, and I myself believed it in my 20’s. It goes with Bob Marley CDs.. Once you stop drinking from red Solo cups, and want your liquor from clean glassware, you should be suspicious of this theory. It does work as a final endgame, when government finance is totally on the rocks, like New Zealand in the early 80’s, or… Read more »

Gagdad Bob
3 years ago

The problem with our political class is that it never runs out of other people’s money.

Ben the Layabout
Ben the Layabout
Reply to  Gagdad Bob
3 years ago

It’s even worse: they create money (credit) as needed, this has been the world’s “money” for decades. This scam will work until no one accepts the fiat money any more.

Taxation is sort of a polite formality, a nod to tradition to pretend they’re not completely gone. We would not have amassed $30 Trillion (or whatever) in debt if we ever had even the pretense of paying as we went.

Judge Smails
Judge Smails
Reply to  Ben the Layabout
3 years ago

Taxation will also be used to extract the remaining assets from Heritage America for redistribution to our newly minted fellow “citizens” crossing the southern border as we speak.

Compsci
Compsci
Reply to  Judge Smails
3 years ago

Yep. Follow Biden’s new Infrastructure initiative, which is simply a tax plan deigned to grab the Boomer’s 401k’s before their Millennial offsping.

Calsdad
Calsdad
3 years ago

Re: ” Even further, the right people in a corrupt system cannot correct the defects of the corrupt system “. Exactly. That’s a lesson that should have been learned a long long time ago. Oh wait – it was. It’s why most of the MEN who setup the government we used to have – tried to design it to keep as much power out of the hands of the Federal government as possible. You simply cannot trust politicians – EVER. The ONLY way to fix the problem – is to make sure the problem doesn’t exist in the first place.… Read more »

JR Wirth
JR Wirth
3 years ago

“The Fed is now captive to the spending frenzy of Washington.” – Always has been. today more so than ever. Even LBJ had to throw Fed Chairman McChesney against a wall to lower interest rates so Vietnam could be well funded. Today it’s catered dinners in NY and DC and Jackson Hole.

Calsdad
Calsdad
Reply to  JR Wirth
3 years ago

Saying “the Fed is now captive to the spending frenzy of Washington” is just craziness. The Fed was setup to ENABLE the spending frenzy of Washington. Duh. Reminds me of a co-worker who , over a lunchtime conversation one day amongst a number of us – made the comment ” without a central bank we’d have communism!!”. LOL. I told the guy ” you’ve got it 180 degrees wrong. A central bank IS ONE OF THE CENTRAL TENETS OF COMMUNISTS ” When the guy still kept arguing the point – the Chinese guy at the table – who got out… Read more »

American Citizen 2.0
American Citizen 2.0
3 years ago

I think one of the biggest things that has changed with respect to money at the international level is: where else are you going to put it if you want to have a reasonable chance of ever getting it back? So, there is huge global demand for dollars and almost no global demand for any other kind of money. Our overlords realized that they can basically tax the whole planet because of that demand for dollars internationally. In short, we aren’t on the gold standard anymore and we shouldn’t act like the government’s money is similar to household finances where… Read more »

Moe Noname
Moe Noname
Reply to  American Citizen 2.0
3 years ago

The term is called “seignorage”. The Fed cost to produce currency (“yay! money machine go brrrr”) is effectively zero, global demand for USD is infinite, so the arbitrage opportunity is huge.

The issue with all of this is malinvestment: everyone’s investment plan pencils out when the cost of capital is zero.

JR Wirth
JR Wirth
3 years ago

“The gold bugs have now moved to crypto currency as the savior.” – Not all of them. I refuse to buy digital canned air. Even if it takes off as a real currency it would be made illegal tomorrow (See E-Gold 12 years ago). And the establishment loves it because it creates a carbon sink, sponging up a lot of this excess money creation. There’s no greater fantasy land than a currency existing outside the scope of governments.

The Wild Geese Howard
The Wild Geese Howard
Reply to  JR Wirth
3 years ago

Bitcoin is probably the prime example of Clown World perception being reality. The, “mining,” process consumes valuable electricity and ties up valuable computing hardware to solve a computational puzzle that does not seem to have a purpose beyond extracting another Bitcoin from the, “mine.” It’s not like they’re crunching radio telescope data to help search for intelligent life or biomedical data to determine which proteins most influence cancer growth. Put another way, Bitcoin consumes more power than the country of Argentina per year to solve a mathematical triviality. That doesn’t even account for all the physical computing hardware that is… Read more »

Joe Blow
Joe Blow
Reply to  The Wild Geese Howard
3 years ago

FUD. Obviously never spent more than 1 minute looking into it.

Social Pariah
Member
Reply to  The Wild Geese Howard
3 years ago

XRP is clean, costs pennies, and is a delivery system that takes mere seconds. You might check it out. Under a buck now until SEC gets off their back.

Gunner Q
Reply to  JR Wirth
3 years ago

Basically my view on Bitcoin, too. It’s a fiat currency with no State backing. A very stable fiat currency, perhaps, but no State backing.

Joe Blow
Joe Blow
Reply to  Gunner Q
3 years ago

That’s the WHOLE point! The state is what is slowly killing us. Decentralisation is coming, might as well understand this.

Joe Blow
Joe Blow
Reply to  JR Wirth
3 years ago

FUD – obviously a psyop.

JR Wirth
JR Wirth
3 years ago

“The so-called bond vigilantes will drive up interest rates, which will make borrowing more expensive.” – They actually did exist until the mid-90’s. Fed policy changes have ensured that they’re now impotent. The Fed IS the bond market, because it’s the buyer of last resort. This was especially seen in March of last year. If you sell a car knowing that a buyer with unlimited money will buy it at say $30k, the price of that car will never fall below 30k. And they’ll buy stock ETFs too when we have our free-fall later this year. They’ll buy it all… Read more »

JR Wirth
JR Wirth
3 years ago

“The range is between 15% to 18%, depending on when tax policy was changed. This is the logic of the flat tax.” – Not only is this true, various studies, including ones done by the IRS 20 years ago, have shown that when your effective tax rate climbs over 17%, you start cheating. Effective tax rates are incredibly stable. You reach a threshold where you can’t get blood from a turnip. It almost cries out for a 17% flat tax after a large personal exemption.

JR Wirth
JR Wirth
Reply to  thezman
3 years ago

Absolutely true.

Ben the Layabout
Ben the Layabout
Reply to  thezman
3 years ago

It also explains why even for the average individual, taxes are complex. Perhaps my situation isn’t typical, but I’d be lost without a CPA. If your income is from a private pension, you have investments, rental property, etc. good luck getting it done on a 1040-EZ! I recently sent in my tax paperwork and it was probably 50 pages of documents. In fairness, maybe half of that is my brokerage transactions. Zero or near-zero trading commisions are a mixed blessing; I suspect this year’s CPA bill is going to be a bit highen than last year’s 😀

Peabody
Peabody
Reply to  Ben the Layabout
3 years ago

My taxes come spiral bound. I haven’t read anything but the summary for years. It’s all gobbledygook. I just hold my breath till I get to the bottom line to see how much more of our time spent on Earth the IRS is clawing back.

American Citizen 2.0
American Citizen 2.0
Reply to  thezman
3 years ago

This is exactly why they reject the flat tax. They want the tax code to be a negotiation for power and money and so they want it to be a byzantine as possible.

Drew
Drew
Reply to  American Citizen 2.0
3 years ago

Good thing no European power in the late 18th century had a byzantine tax code that was used by the state to entrench government power, and subsequently was a factor in the head of state getting dethroned and decapitated.

Thud Muffle
Member
3 years ago

Just don’t screw it up until I depart. I’m in my 80’s so it won’t be long.

KGB
KGB
Reply to  Thud Muffle
3 years ago

Also said by the guy in his 70s, the guy in his 60s, the guy in his 50s… When do we stop kicking the can?

Questa Nota
Questa Nota
Reply to  KGB
3 years ago

Will our Weimar hyperinflation be accompanied by Cabaret 2.0 and similar cultural phenomena? Will there be adequate wheelbarrow parking for the ticket purchasers?

Drew
Drew
Reply to  Questa Nota
3 years ago

Hyperinflation is just jubilee by another name. The Weimar republic’s currency problem existed mostly in the cities because the urban couldn’t trade directly with the rural for food. The rural largely escaped the worst of it.

Steve
Steve
Reply to  Thud Muffle
3 years ago

So you have no offspring? Or do you not give a damn about them? Either way, you are a selfish dick. Please hurry up and move along.

Falcone
Falcone
3 years ago

There’s “hyperinflation” and there’s just plain real and serious inflation. We have the latter. Not sure why it makes a big difference when everything in your life is suddenly very expensive. And if you’re trying to buy a house, Or even a new car. Good luck thinking the prices will be like they were only 12-24 months ago. Same for groceries. And if you’re rich, the prices of luxury goods are through the roof. Point being, we don’t need to meet the definition of hyperinflation to find ourselves in a real squeeze. So the rules of money supply are still… Read more »

3g4me
3g4me
Reply to  Falcone
3 years ago

Excellent comment. I obviously agree with you regarding today’s level of inflation for the necessities of middle-class life, and the ever-tightening squeeze on the same. The goal and ultimate result will be the destruction of White people living like White people. Before eradication, we are to be reduced to peonage.

Jack Dobson
Jack Dobson
Reply to  Falcone
3 years ago

Like so much, the index to calculate inflation intentionally distorts the result. It bears little semblance to the realities of the current year. Rent, for example, literally cannot be collected so no inflation there. These type bureaucratic takings without due process will be the norm soon.

Falcone
Falcone
Reply to  Jack Dobson
3 years ago

That’s an interesting point.

All that money that would have been going to rent is going somewhere else. Is that causing price spikes elsewhere?

Al from da Nort
Al from da Nort
3 years ago

Z Man; I can’t argue that govt. spending goes unchecked and the predicted restraints have not availed to stop it and the predicted catastrophes have not happened either. But yet…. I very clearly recall > 18% inflation > 21% prime rate > 24% commercial unsecured credit when I was working as a summer-hire ‘credit punk’ in a regional money center commercial (non-consumer) bank in the summer of 1974. That’s not Weimar-level inflation, but we were well on our way. Had not the TPTB stepped in to stop it circa 1980, we might well have gotten to full Weimar. We’re hearing… Read more »

Technojunkie
Technojunkie
3 years ago

IT-driven productivity gains have mostly kept pace with the sheer waste of bureaucracy. There really aren’t that many people doing useful work. Shut down most of the economy that’s mostly fake anyhow? Sure. Throw in third world serfs doing real work for virtual green paper and everything looks fine. Eventually China’s virtual paper is going to look better than ours, if only because China forces the issue and says you have to use it to buy their stuff. It’ll be the new Petrodollar. Then we’ll be really sorry that we don’t have a more nationalist economy. But we still need… Read more »

TWS
TWS
3 years ago

First, let’s assume we have a can opener…

tarstarkas
tarstarkas
3 years ago

We were on a gold standard during both of the world wars. The wars cost enormous sums of money and the gold standard really did nothing to reign in the allied governments’ spending.

Bitcoin is a joke. The second it starts having the effect its proponents claim it will have, they will outlaw it. But even if they weren’t going to outlaw it, do they really think the bottom 25% of the population can effectively deal with and use such a convoluted money system?

Mikep
Mikep
3 years ago

“Economics just pseudoscience”. Possibly, but I think the main purpose of economics is as an ad hoc justification for the status quo, if reality will achieve this then no doubt reality wIl do. If not, it’ll have to be pseudoscience.

AntiDem
AntiDem
3 years ago

Our foreign “debt” isn’t really debt. It’s a way to morally launder old-school tribute payments from vassal states (who don’t expect their “loans” to ever be repaid) to the empire. We created this pretense because we don’t want to admit that we’re an empire or that we have vassal states that pay us tribute in exchange for security. But the reality of the situation is reflected in the fact that this debt behaves nothing like normal debt.

When the empire winds down, we’re in for a nasty encounter with reality.

Jim Smith
Jim Smith
3 years ago

“Economics is downstream from politics.” And politics is downstream from biology. Everything is downstream from biology, which is why libertarianism doesn’t work and empires always collapse.

JerseyJeffersonian
JerseyJeffersonian
Reply to  Jim Smith
3 years ago

There is a reason that, before they truncated the term to just “economics”, it was generally known as political economy.

TomA
TomA
3 years ago

A New Tomorrow (cont) All LEOs are hunters, and some are Ronin. Contrary to PC disinformation, all LEOs are highly attuned to the common tells of criminal behavior, and profiling is alive and well but living under the radar. Why does it exist? Because it works. We all have this proclivity in our DNA, as it’s an ancient self-defense mechanism, but LEOs hone it into a professional skill. So don’t act like a criminal. And that starts in your head. If your cause is righteous, your body will follow your mind. And near forget that the disease afflicting this nation… Read more »

LineInTheSand
LineInTheSand
Reply to  TomA
3 years ago

TomA, are you giving us daily paragraphs from a book? Did you write it?

TomA
TomA
Reply to  LineInTheSand
3 years ago

No. It comes out of my head as a spontaneous daily posting. Just what I’m thinking about on any given occasion. I get lots of inspiration from Zman’s knowledge of history and insight. You could call it a work in progress.

As a side note. The book & movie “The Martian” by Andy Weir was actually created online as a collective effort of many contributors to his blog. It evolved over many months with lots of plot details solved by soliciting input from others. There’s no reason this same approach couldn’t be used by the DR.

Citizen of a Silly Country
Citizen of a Silly Country
3 years ago

Even more than the Covid spending spree, Japan is great destroyer of economic theory. Japan has massive debt and prints money like water over Niagara Falls, yet it battles deflation, not inflation. Sure there are explanations, trade surplus, aging population, debt held mostly internally, but still, debt to GDP of 250% and growing, yet its bond yield are lower than U.S. yields. Betting against the Yen and Japanese bond yields even has its own name: the Widow Maker. The scary thing is that Modern Monetary Theory seems to describe the world better than classic economics. Btw, don’t confuse MMT description… Read more »

tarstarkas
tarstarkas
Reply to  Citizen of a Silly Country
3 years ago

I think this will fall apart when/if the US loses the reserve currency status and it probably really would cause hyperinflation. Of course, that assumes the rest of the status quo remains in effect. If we lost the reserve currency status, the government might very well pass limitations on foreign “investment” (using all that US money to buy up US assets.) and repudiate the bonds held by foreigners and foreign institutions. But internally, this would present, I would think, a lot of problems, especially with the unfunded liabilities. The new brown hordes are not going to accept huge tax burdens… Read more »

3g4me
3g4me
Reply to  Citizen of a Silly Country
3 years ago

Citizen: Your QED makes sense – taxes’ utility is to pull money out of the system, not to pay for spending. And then consider who pays the taxes. Tits ‘n teeth (otherwise known as AOC) said something the other day when criticizing the latest spending bill for not going far enough in ‘transfer’ payments. Taxes are merely one of the official methods of extracting wealth from the White middle class and redistributing it to all the POX.

Citizen of a Silly Country
Citizen of a Silly Country
Reply to  3g4me
3 years ago

Correct. Under MMT, the govt just prints money as needed, supposedly in line with excess capacity in the system. In that system, taxes would be used for two purposes. First, to withdraw excess money from the system, which is an economic issue. Second, to reduce the income and/or wealth of Whites, which is a political issue. Sure, the govt can always give more money to POX via money printing, but that doesn’t lower the income/wealth of Whites. For that, you need direct taxation. And, remember, in a democracy, turning Whites in helots is perfectly legal and since a majority voted… Read more »

Jack Dobson
Jack Dobson
Reply to  Citizen of a Silly Country
3 years ago

As mentioned above (by Z, maybe) taxes now operate as rewards and punishment rather than revenue. The coming hikes will target those who oppose even a hypothetical threat to the State

OrangeFrog
OrangeFrog
3 years ago

“That is, is the field of economics just pseudoscientific nonsense?” Yes. Yes. Yes. As you mention, there are some economic truths; but even these could not really be said to be universal laws. Most theories I have seen for economics seem to borrow heavily from physics. Good old fashioned, easily verifiable physics, I might add – fluid dynamics for example. Naturally, if you want to give your field more credibility you dust of the old differential equations textbook and stick some mathematics in. I think it is also fair to say that even some pretty solid reasoning – like that… Read more »

el-porko
el-porko
Reply to  OrangeFrog
3 years ago

Back in engineering school, we had to take “Econ 101”. Even at the young age of 20, it seemed to me that the economics field was trying overly hard to overlay calculus equations on their theories in order to be considered “science”. I’ve always maintained that economics is more social science than hard science.

nailheadtom
Reply to  el-porko
3 years ago

Economics isn’t even social science. In fact, anthropology is more useful in the study of monetary matters. Read David Graeber’s “Debt, The First Five Thousand Years”. People don’t actually want money anyway, they want stuff. Unless they’re higher level management or speedy outfielders, whose contracts are bigger than the economies of small countries. No matter how much money is enpixelated, it’s just electrons lined up in a server somewhere, not even slips of paper with dated engravings of career criminals . What counts is what can be obtained with it and profligate enpixelation will eventually lead to a currency being… Read more »

Kentucky Headhunter
Reply to  el-porko
3 years ago

“I’ve always maintained that economics is more social science than hard science.”

Same with stock market “analysis”. Why is Tesla “worth more” than all the other auto makers combined?

Compsci
Compsci
Reply to  Kentucky Headhunter
3 years ago

Because “investors” are greedy and betting on the come. The want 100% returns before the holiday season returns. But they should not define the market, nor be considered representative of sound investing.

Calsdad
Calsdad
Reply to  OrangeFrog
3 years ago

Well there is one school of economics – that the Swamp doesn’t like much, but has been reasonably accurate as to how things work. Typically what Austrian school economists will do is say ” if you do X – you’re going to get Y” . Most of the time – they’ve been correct. Much more correct than “establishment” economists like Krugman. My recollection is that Austrian economists have also come right out and declared that most Swamp supported economists rely far too heavily on equation and “math” to try and make their prediction. Economics is a study of human behavior… Read more »

LineInTheSand
LineInTheSand
Reply to  Calsdad
3 years ago

“Typically what Austrian school economists will do is say ” if you do X – you’re going to get Y” . Most of the time – they’ve been correct.”

Did you read Z’s post? Austrians are to economics as Libertarians are to human nature.

MMT is the accurate description of the economic choices available to a country that is the reserve currency and has the biggest economy and most productive population. (Of course, we’re never going to pay it back…)

LineInTheSand
LineInTheSand
Reply to  LineInTheSand
3 years ago

I don’t like the results either. But I assume that we are trying to be objective and observe the world as it really is, not as a model in our heads dictates.

B125
B125
3 years ago

Blah blah blah.

Always find these debates tedious. In 2021, bonds gold, crypto, taxes, are just whitey talk. With the new imported voting demographic, taxing and spending will be as the Democratic Party / Globohomo sees fit. One day your 401k and Robinhood will be confiscated. Because your great grandaddy was a racist.

Ultimately every issue is downstream from race. The only language they speak is “Ayo, gibsmedat”

Captain Willard
Captain Willard
Reply to  B125
3 years ago

They won’t confiscate your 401-K. That would destroy the grift and signal panic. Instead they will tell you that you can only buy government bonds with it. They will yield 2%. Inflation will be 10%. Problem solved. I’m guessing Reparations will be financed this way.

Jack Dobson
Jack Dobson
Reply to  Captain Willard
3 years ago

Exactly. If someone can shift their 401k’s into what is now considered high yield muni bonds it is the time to do so. The equity markets will be routiney tanked here on out to increase buying opportunities for fewer select investors, too.

Think of it as redistribution with commissions.

TPTB loathe the day they allowed rebel to own equity and that is being corrected

Wolf Barney
Wolf Barney
Reply to  B125
3 years ago

I keep thinking about our 401ks being confiscated. We get closer all the time. They can come up with any number of ways to justify taking our retirement money using their way of blaming whiteness. After all, isn’t planning ahead and saving for the future a white thing? And if whiteness is bad and something to be eliminated, and equity is the goal….you can see where this is going.

lib tardy
lib tardy
Reply to  Wolf Barney
3 years ago

re reparations, who decides how black you have to be to get some, and how will the percentages be calculated. If my dna shows 3 percent african ancestry am I a repressed ex slave seeking entitlements? And will the reparations be a one time cash prize or an ongoing support mechanism, cuz, you know, if you give a mouse a cookie—

Wolf Barney
Wolf Barney
Reply to  lib tardy
3 years ago

All you need to know is whatever you give them it’s never enough.

tarstarkas
tarstarkas
Reply to  Wolf Barney
3 years ago

That’s the rub. If I thought for one second reparations would end the race grift, I would be all for them. But paying up reparations would only guarantee new demands for a second round of reparations. We are likely to get something worse than reparations, something more akin to the reparation schemes already going on in America with nebulous things like investments in the black community. They will not be a one time payment, but a new ongoing and ever increasing expense. Since most of it will be stolen or otherwise wasted, it will just make African-Americans more angry (all… Read more »

Hoagie
Hoagie
Reply to  Wolf Barney
3 years ago

They’re really not talking reparations. They never actually say what they mean and you should know that by now. What they want is Tribute. Monthly, yearly, eternally, never ending Tribute!

Maniac
Maniac
Reply to  Wolf Barney
3 years ago

I actually went to HR about two years ago and asked them to reduce the amount of my paycheck going toward my 401K. Even if they don’t confiscate it, the system will collapse long before I reach retirement age.

3g4me
3g4me
Reply to  B125
3 years ago

Regardless of the precise means used to do it, they will definitely be coming for the 401ks. Hubby and I just shake our heads at his former colleagues now retired from fedgov, constantly monitoring their 401ks and absolutely certain they’ve got their future and their progeny covered. We regard this the same as we regard any prognostication for ‘America’ in more than 10 years’ time – utter fantasy based on a dying entity. Yes, they can keep the financial plates spinning, but their equation depends on a certain % of pliant Whites to keep things running, and a certain passivity… Read more »

The Wild Geese Howard
The Wild Geese Howard
Reply to  3g4me
3 years ago

I deal with a guy who is convinced he is at the beginning of a great 10-year plan to get rich buying and renting condos to tourists in Florida.

I don’t have the heart to tell him it’s not the year 2000, or even 2010.

3g4me
3g4me
Reply to  The Wild Geese Howard
3 years ago

Wild Geese- And yet, the irrationality and perverseness of humanity may prove his get rich scheme a success. I’m constantly amazed at what ends up being profitable and what does not.

Ploppy
Ploppy
Reply to  3g4me
3 years ago

They’ve already worked out how to steal the 401ks from the middle classes. The Roth 401ks and IRAs now require you to take the money out of the tax-free account within a couple years of inheriting it, and Biden’s tax plan will stop allowing basis step-ups when inheriting stocks. That means that when you get $500k of stock that grandpappy bought in 1930 for $100, you’re paying capital gains on all of it.

Jack Dobson
Jack Dobson
Reply to  Ploppy
3 years ago

The end of basis step-up will have a dramatic effect on personal wealth. I’m scrambling to ditch a few things, nothing huge but important for me, before the tax code changes because capital gains taxes are about to be used to cripple those not favored.

Severian
3 years ago

I’ve never understood any of the economic arguments, and not just because I’m a Liberal Arts guy who needs to take off a sock to count past ten. It’s because I know something about the history of the USSR. Their “economy” was pure make believe, top to bottom, stem to stern, and they staggered on for most of a century. What brought them down was the same thing that will bring “us” down: vapor lock. Each little bureaucrat is an emperor in his own kingdom. Each little kingdom is thoroughly corrupt. But alas for all the little emperors, they rely… Read more »

Citizen of a Silly Country
Citizen of a Silly Country
Reply to  Severian
3 years ago

Took my fair share of economic classes back in the day. What a waste. Economics might be the stupidest major in the history of higher ed.

First, it’s reasonably hard but pointless, so you’re wasting good minds on the equivalent of digging a ditch and filling it back up. Second, once you get past all the math and charts, it’s all just based on certain assumptions which are often ridiculous.

3 Pipe Problem
3 Pipe Problem
Reply to  Severian
3 years ago

Since the analogy between economics and physics has already been posted somewhere in this thread, what is true is that entropy always wins.

Al from da Nort
Al from da Nort
Reply to  Severian
3 years ago

Sev; One thing the old Commies did understand was production. Sure, it was inefficient. Sure it was what GosPlan* wanted, not what the people wanted. Sure it took the KGB to keep it moving. So I’g guess that understanding was how they kept going so long. Pre-industrial feudalism gussied up under Marxist theories. No other economic theories needed. My theory of their collapse, FWIW: The new Commies actually believed Marxism and so they just *assumed* production (just like AOC). They thought they could get production without the KGB making life unpleasant for even them. Once they took the boot off… Read more »

Al from da Nort
Al from da Nort
Reply to  Al from da Nort
3 years ago

*GosPlan = State Central Planning, a vast bureaucracy that passed out production quotas to every enterprise, large or small.

Severian
Reply to  Al from da Nort
3 years ago

Al, agreed (I even wrote about this somewhere). Gorbachev was born in the late 1930s, to a long line of insiders. The war didn’t affect him in any meaningful way (not least because he barely remembered it), and by the time he was coming up in the Apparat, Khrushchev had denounced Stalin and the kinks of Communism had been ironed out as much as they ever would be. It “worked,” and since he didn’t have any of the hard schooling his predecessors had, he just assumed it always would work… As for “understanding production,” well… they could build a tank,… Read more »

LineInTheSand
LineInTheSand
Reply to  Severian
3 years ago

Heh, I guess that Z is Russian. We must know his degree of Asiatic admixture. Not entirely kidding on that point.

Al from da Nort
Al from da Nort
Reply to  Severian
3 years ago

Sev; By ‘production’ I was thinking along the lines of the USSR as a Palace Economy with the Communist Party as Pharaoh/ Inca, whatever. The palace economies were pretty stable but the USSR was not. Both relied on coercion and (inherently dubious) supernatural validation (but mostly coercion). So what made the difference_? Because their legitimacy relied on recurring natural phenomenon, it didn’t really matter whether Pharaoh actually believed he could control the annual flood of the Nile or the Inca actually believed he could bring back the Sun from the North to end winter in the peasants’ potato fields. It… Read more »

Compsci
Compsci
Reply to  Al from da Nort
3 years ago

The Commies, like Libertarians, made certain assumptions about Human nature. Those assumptions proved false and those systems failed. Human nature has not changed, but it seems a new set of grifters wants to try the grift again on a younger, naive populace. Good luck with that.

Captain Willard
Captain Willard
3 years ago

If economics is about anything, it’s about constraints. God bless the old macroeconomists; they thought a Government had constraints on spending – “crowding out” of production private investment via higher interest rates and capital scarcity, intertemporal consumption/savings preferences, trade/currency effects etc. The old economists just lacked imagination. They failed to grasp that the entire system could be financialized. Even subprime used car loans are routinely securitized and sold off on Wall Street, and at low rates that would astonish most people on this blog. Robinhood and LendingClub are just two recent examples of the exploration of new frontiers of financialization.… Read more »

Drew
Drew
Reply to  Captain Willard
3 years ago

The various methodologies of economic analysis can be useful, to a limited extent, as long as scarcity is a fundamental assumption in the analysis, and the analysis is focused on tradeoffs. Using economic theory to design a utopia is as stupid as using theology to design a utopia, because utopia is by it’s nature not limited by scarcity. There’s simply no way to turn a world of scarcity into a world of non-scarcity.

Captain Willard
Captain Willard
Reply to  Drew
3 years ago

Indeed. This is why the “indifference curve” is still a useful framework for Microeconomics, even if the behavioral economics revolution disproved some of the assumptions around rationality.

It’s just hard to extrapolate to the general case, as you observe so well.

Ben the Layabout
Ben the Layabout
Reply to  Drew
3 years ago

Or restated, I’ve often belabored the point here, points better made by countless thinkers, that fundamental problem of philosophy going back to Plato (at least): You can create a simply delightful imaginary world (Utopia) in the mind, but the problem is figuring out how to either escape into it, or to impose one’s millenial scheme upon the uncooperative outside world 😀

LineInTheSand
LineInTheSand
Reply to  Ben the Layabout
3 years ago

My belief is that if you begin with a homogeneous population then many of the problems that have historically confounded us fall away.

“Utopia” will always literally mean “nowhere,” but it’s a question of how many other unnecessary problems do you want to introduce to governing?

Al from da Nort
Al from da Nort
Reply to  Captain Willard
3 years ago

Capt.;
Good point about financialization. In any society of any scale there has to be money. But there does not have to be financializattion.

Dinothedoxie
Dinothedoxie
3 years ago

People on the right need to accept the reality that deficit spending does not matter in the ways that they want to believe it does. Further, it’s foolish to attempt to end it. The type of austerity that would be needed to bring the federal,budget into balance would be extremely unpopular, resulting in the party doing so losing power. And being replaced by people would ramp up the spending again. The only thing such an expertise would accomplish is enabling the priorities of their political opponents. Which is exactly what happened from 1994 -2010 when the republicans captured congress and… Read more »

Maus
Maus
Reply to  Dinothedoxie
3 years ago

“Instead the fight should be over how to spend the money.” Exactly this. I don’t care about the deficits. What I want eliminated are the subsidies for shitty art and fruitless space exploration, the make work jobs for idiots that are thinly veiled welfare, the federal loan guarantees that seduce those without merit to try tertiary education and fail. At its root, fedgov just can’t stomach seeing wholesale suffering, famine, disease and death; so no scheme seems unworthy of funding: a trough for every snout. So, in conclusion, I’m ready for round #4 of totally unneeded stimulus. Go big or… Read more »

3g4me
3g4me
Reply to  Maus
3 years ago

The fedgov could easily ‘stomach’ wholesale suffering, famine, etc., so long as it’s limited to compliant Whites. The reason no scheme is seen as unworthy of funding is because it buys them temporary peace with the POX. However, said POX are constantly ratcheting up demand, just as their own numbers increase and ours are steeply decreasing. There will be a reckoning, and your children and/or grandchildren will pay it. Plan accordingly.

Hun
Hun
3 years ago

Hyperinflation is a political decision. The rulers have to make some real deliberate effort to create one.
When hyperinflation arrives one day, you should know that it was created intentionally and not as a result of mysterious market forces.

Dinothedoxie
Dinothedoxie
Reply to  Hun
3 years ago

Hyperinflation is the rights boogeyman.

The reality is that it only happens in small isolated economies cut off from trade.

Hun
Hun
Reply to  Dinothedoxie
3 years ago

Hmm, sure. that is not what I was talking about.
Was Weimar Germany a small isolated economy?

What I meant with my previous comment is that if hyperinflation arrives, it’s not going to be because of the “printing” that has been going on for decades. It will be because someone makes a decision to finish off the currency, just like they did in Germany after WWI.

Festus
Festus
Reply to  Hun
3 years ago

This is correct. It is a political decision that benefits the powers that are implementing it. Mugabe in Zimbabwe used hyperinflation to purge his main competition (the upper class doctors / lawyers, etc). They were all forced to leave the country or become destitute. Better to rule a dung heap than deal with your opposition. Also, he was able to soak up all the charity money that flowed in at its peak.

dinothedoxie
dinothedoxie
Reply to  Hun
3 years ago

Was Weimar Germany a small isolated economy? Yes it was, actually. They had just lost WWI – with enormous disruptions to their economy. They had also lost something like 30% of their pre war territory and the trading network of Eastern Europe – which they had previously been integrated with – had been shattered by the politcal fallout of the war – not least the collapse and disappearance of the Austrian Empire, the Russian Empire and the Soviet / Russian civil war. Finally, Weimar was still under military blockade in the early 20s, experiencing famine in its cities and reliant… Read more »

Hun
Hun
Reply to  dinothedoxie
3 years ago

No it wasn’t isolated. None of what you wrote was a cause of the hyperinflation.
And since you’re talking about ignorant people, you should look in the mirror.

dinothedoxie
dinothedoxie
Reply to  dinothedoxie
3 years ago

Those conditions were necessary for the hyperinflation to happen. The proximate cause was obviously the government’s attempt to inflate away their war debt. But that would not have been needed had they won WWI And it would not have led to the hyper inflation experienced by Germans had all those conditions not existed. You seam “offended” at the idea that Germany in the early 20s was being victimized by the WWI victors with the result of great suffering for the German people. Which is really odd as that narrative is why the NAZIs were able to come to power in… Read more »

Hun
Hun
Reply to  dinothedoxie
3 years ago

You are imagining things. I wasn’t offended.

But I a ma bit annoyed by your cluelessness. You come very close to stating that hyperinflation was a political decision and then you go back to your nonsense.

Compsci
Compsci
Reply to  dinothedoxie
3 years ago

You forgot the war reparations—to be paid in “gold” Reichsmarks. The Allies were no fools wrt inflation of currency to obliterate debt.

Judge Smails
Judge Smails
Reply to  Hun
3 years ago

Don’t the Soros kids deserve to eat too? Have some compassion.

Evil Sandmich
Evil Sandmich
Reply to  Dinothedoxie
3 years ago

It can happen anywhere, though the U.S. and Europe have decided to print-print-print and it’s pushing everything else out. Local currencies cannot be caught to the upside (lest they not be able to export anything) so they need to print-print too, which makes the western currencies even more appealing, which allows even more inflation to be exported. Rinse-lather-repeat as they say. That’s kinda been the weird thing all along with China thinking it’s playing 4D chess with them poisoning their countryside and enforcing a regime of poverty on their people by trading their industrialization for phony green paper in an… Read more »

dinothedoxie
dinothedoxie
Reply to  Evil Sandmich
3 years ago

It can happen anywhere…

It really can’t.

Take a look at the countries that had episode of hyper inflation in the 20th century. They’re all small and economically isolated.

Evil Sandmich
Evil Sandmich
Reply to  dinothedoxie
3 years ago

Their room for error was just smaller; the room for error is still there though, it’s never “gone”.

Al from da Nort
Al from da Nort
Reply to  Hun
3 years ago

Hun;
Well, I certainly agree that letting hyper-inflation continue to spin up is a political decision. Our history would have been very different if TPTB on Wall St had not got the message to Jimmy Carter circa 1979 to push out the Marxists in his admin. and reign it in.

Inflation was pushing 20% at the time, IIRC. Not Weimar but heading there.

dinothedoxie
dinothedoxie
Reply to  Al from da Nort
3 years ago

20% a year isn’t anywhere close to hyperinflation.

There have been countries last century that had episode of triple digit annual inflation. That’s not hyperinflation either.

Al from da Nort
Al from da Nort
Reply to  dinothedoxie
3 years ago

Dino;
So there is no true hyperinflation/Scottsman_?

So long as the govt. continues to expand the money supply, inflation compounds upon itself. It stops when the govt. stops. Same thing as happened in Weimar. The govt. stopped expanding the money supply and the inflation cycled down, as you should know.