Tag: economics

Shut Up, He Explained

I put up a post on Gab attempting to explain to Boomercons that eliminating student loan debt was not inflationary. I was unsuccessful, on the basis of the 193+ replies.

Dear Boomercon,

Eliminating student loan debt is not inflationary. It cannot be inflationary, because in a credit economy, cancelling debt reduces the quantity of credit money in the system.

This is intrinsically deflationary.

Love,
Vox

So, because I am a kinder, gentler Dark Lord, I decided to helpfully explain to this woefully ignorant souls the nature of credit money and how it relates to the monetary phenomena known as “inflation” and “deflation”.

Dear Gab commenters,

The undeniable fact is that I know considerably more about economics, debt, and credit money than you do. Not only am I an economist by training, but I correctly predicted the 2008 financial crisis and I am the author of the labor mobility refutation of free trade.

Frankly, most of you appear to be functionally retarded where economics are concerned. So, I will type very slowly in order that a few of you might be able to follow along.

Most money is debt and it comes from nowhere. It is not printed by the government, it is literally created from nothing when a loan is taken out. This is inflationary. When a loan is cancelled, forgiven, or written off, the debt literally vanishes. This is deflationary, since it reduces the amount of money in the economy.

If the loan is paid off, either by the debtor or by a third party, then no money leaves or enters the system. It is a neutral action. If interest is paid on the loan, this is mildly inflationary but trivial at current interest rates.

That’s literally how debt money works, and if you don’t understand why L.1 is bigger and more important than the M1 money supply, then please stop sharing your opinion on the subject of student loans because you have absolutely no idea what you’re talking about.

Love,
Vox

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A Good Start

Fake President Biden announces the first step in what we can hope is a path to forgiving all student debt and banning all student loans.

The president will forgive debts of up to $20,000 dollars for students who went to college on Pell grants and $10,000 for students who did not receive Pell grants. Debt forgiveness only applies to individuals earning less than $125,000 or couples filing joint earnings of $250,000.

Don’t make the mistake of defending the wrong thing because bad or stupid people happen, for whatever reason, to be doing the right thing for a change. Student debt is a scam, it should never have been legal in the first place, and the law preventing student debt from being discharged.

Make no mistake: if you’re on the side of the bankers and the Boomers and the universities here, you are absolutely and without question choosing the side of evil. And there is no amount of solipsistic argumentum ad personalem is going to make your argument any more convincing or moral, or any less economically ignorant and churlish.

Don’t forget the Parable of the Unmerciful Servant either.

Then the master called the servant in. ‘You wicked servant,’ he said, ‘I canceled all that debt of yours because you begged me to. Shouldn’t you have had mercy on your fellow servant just as I had on you?’ In anger his master handed him over to the jailers to be tortured, until he should pay back all he owed.

And FFS, discharging debt is not inflationary, so don’t even think about trying to cite that sort of media ignorance at anyone. In a credit money economy, debt-forgiveness is literally deflationary.

UPDATE: Stonetoss shows how to silence the Boomercon critics.

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Unrest in Europe

If even the wealthy and highly-prepared Swiss are anticipating shortage-related social unrest despite their world-class self-sufficiency, the social order across Europe and in the UK is unlikely to remain intact this winter.

Swiss people may revolt and resort to looting if the Alpine nation is hit by a severe energy crunch this winter, the police chief of one of its cantons told local media on Saturday.

Fredy Fassler, the head of the Security and Justice Department in the canton of St. Gallen, told German-language daily Blick that a blackout would have “far-reaching consequences.”

“Imagine, you can no longer withdraw money at the ATM, you can no longer pay with the card in the store or refuel your tank at the gas station. Heating stops working. It’s cold. Streets go dark. It is conceivable that the population would rebel or that there would be looting,” he said, adding that the country’s authorities should take measures to prepare for such extreme scenarios…

Fassler’s comments come after Swiss authorities said last week that they may place restrictions on energy consumption this coming winter, signaling that “power shortages [are] among the most serious risks” for the landlocked country.

What the police chief doesn’t mention is that the main reason the Swiss would likely be rebelling against their government is that the country produces what should be sufficient electricity for its own winter needs, but it has promised to provide a fair amount of that electricity to the rest of Europe. And the Swiss people are very unlikely to accept the idea that they have to freeze in darkness so that their electricity can be sent to France or Germany due to the outdated ideals of a few globalist Europhiles.

Still, the fact that the Swiss authorities are already talking openly about the situation and at least beginning to try to address the problem is a positive sign. The silence of the EU countries on the subject does not bode quite so well. Of course, the solution for the Europeans is perfectly straightforward: stop participating in the neocon’s proxy war on Russia, end the idiotic sanctions regime, return everything that was seized, and apologize profusely to the Russian government.

Like it or not, no one can deny that it’s a better alternative than famine, freezing, and facing a popular revolt. If they don’t choose wisely, the over/under on EU regime change before this time next year is probably around five and could be considerably higher. And Italy and Hungary will not be the only nations to exit the EU.

Nationalism is inevitable. Nationalism is inevitable because globalist imperialism is constructed on false foundations that we now know to be both evil and impossible.

UPDATE: Notice that the Swiss are on the verge of panic on the basis of an expected 10-percent shortfall. I anticipate the shortfalls in other European nations will be at least 3x that.

The energy shortage is “imminent”, Roger Nordmann from the left-wing Social Democratic party told the SonntagsBlick. “The war in Ukraine is causing acute gas shortages. Half of the nuclear power plants in France are at a standstill. And the drought is putting a strain on hydropower. This combination of drastic factors means that Switzerland could be short of around 15% gas and up to 10% electricity in the coming winter,” he said.

So end your war on Russia, guys. You took sides and you lost. It’s over. This really isn’t that hard.

UPDATE: Now the NHS in the UK is also starting to foresee trouble. Perhaps if the British authorities would stop welcoming “refugees” and start repatriating them to their homelands, they’d possess sufficient resources to prevent a humanitarian crisis among their own people.

The UK could face a “humanitarian crisis” involving ill health, excess deaths and rising inequality if the government does not take urgent action on rising energy bills, the National Health Service (NHS) Confederation warned on Friday. The organization wrote to the chancellor of the exchequer, claiming that failing to act would add more pressure on health services that were already strained.

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The Canary Died

A Sri Lankan explains his experience in his native land, and why it is likely to be replicated throughout the Western world.

As a Sri Lankan, I find watching international news coverage of my country’s economic and political implosion is like showing up at your own funeral, with everybody speculating on how you died.

The Western media accuses China of luring us into a debt trap. Tucker Carlson says environmental, social and corporate governance programs killed us. Everybody blames the Rajapaksas, the corrupt political dynasty that ruled us until massive protests by angry Sri Lankans chased them out last month.

But from where I’m standing, ultimate blame lies with the Western-dominated neoliberal system that keeps developing countries in a form of debt-fueled colonization. The system is in crisis, its shaky foundations exposed by the tumbling dominoes of the Ukraine war, resulting in food and fuel scarcity, the pandemic and looming insolvency and hunger rippling across the world.

Sri Lanka is Exhibit A. We were once an economic hope, with an educated population and a median income among the highest in South Asia. But it was an illusion. After 450 years of colonialism, 40 years of neoliberalism, and four years of total failure by our politicians, Sri Lanka and its people have been beggared.

The former president Gotabaya Rajapaksa deepened our debt problems, but the economy has been structurally unsound across administrations. We simply import too much, export too little and cover the difference with debt. This unsustainable economy was always going to collapse.

But we are just the canary in the coal mine. The entire world is plugged into this failing system, and the pain will be widespread.

Read the whole thing. And keep in mind that this appeared in The New York Times. Then realize the likelihood that you and your family are likely going to be facing some variant of these challenges over the next 6-18 months due to the ongoing failure of the neoliberal global order and the wickedness of those who preside over it. Therefore, preserve knowledge, prepare supplies, and purchase ammunition.

The first difference is that neither China nor the rest of the BRICSIA nations are going to come to the rescue of the nations whose governments have declared war on them. The second difference is that the Western nations, being more accustomed to wealth and comfort and even more indebted, have considerably further to fall than Sri Lanka did.

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Whatever Happened to Equality?

It was always nonsense. But the purely mythical nature of “equality” has become inescapably obvious under the rule of Clownworld

There has been a huge backlash in Scotland after the SNP appointment a man as the country’s first period dignity officer. Jason Grant was handed the post for the Tay region of Scotland, with his duties set to include promoting access to free sanitary products following the introduction of the Period Products Act. The Act came into force in Scotland on Monday, and puts into law that tampons and sanitary towels must be made available by councils and education providers to anyone who need them. The Bill was initially brought forward by Labour health spokeswoman Monica Lennon and passed in November 2020, and is intended to eliminate period poverty and help households under financial strain.

I look forward to learning how the Clownworld governments will manage to lose The War on Period Poverty. And what does poverty even mean in a world where people own nothing and eat bugs?

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You’re Not Neutral When You Choose a Side

Switzerland belatedly discovers that it can’t redefine the concept of neutrality.

Russia has turned down a Swiss offer to represent Ukrainian interests in Russia and Moscow’s interests in Ukraine because it no longer considers Switzerland a neutral country.

Switzerland has a long diplomatic tradition of acting as an intermediary between countries whose relations have broken down, but Russian foreign ministry spokesperson Ivan Nechayev said on Thursday this was not possible in the current situation.

“The Swiss were indeed interested in our opinion on the possible representation of Ukraine’s interests in Russia and Russia’s in Ukraine,” Nechayev said. “We very clearly answered that Switzerland had unfortunately lost its status of a neutral state and could not act either as an intermediary or a representative. Bern has joined illegal Western sanctions against Russia.”

Switzerland has mirrored nearly all the sanctions that the European Union imposed on Russia over its military intervention in Ukraine.

No independent sovereign nation is going to trust the Swiss any longer or permit them to act as a neutral intermediary now that their federal government has not only taken sides in the NATO-Russian war, but foolishly chosen the losing side. If the current Federal Council had been in charge when WWII started, it would have taken the side of the Axis and gotten the country occupied by 1944.

This really isn’t that surprising. If the federal government ever decides to redefine chocolate to mean “something that isn’t chocolate”, the demand for Swiss chocolate will collapse too.

If you are as others see you, then the recent statement by a Russian foreign ministry spokesperson that “Switzerland had unfortunately lost its status of a neutral state” could be a tipping point in any understanding of what neutrality and Swiss neutrality mean. It is one thing for the 200-year-old Swiss “perpetual neutrality” recognised at the Congress of Vienna in 1815 to be questioned internally, but for a major power, a member of the United Nations Security Council, to make such a declaration adds a new dimension to the ongoing domestic and global discussions of what neutrality means.

Neutrality means not taking sides. If you take a side, if you engage in economic sanctions or military conflict, then you obviously are not neutral. It’s not just the Russians who recognize that Switzerland is no longer a neutral state, but China and the rest of the BRICSIA coalition too. And what is the significance of “international law” that 80 percent of the global population does not recognize or respect?

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The Fall of NATO

NATO member Turkey has definitively chosen Russia over its so-called allies:

Russia and Turkey are switching to payments for Russian gas supplies in rubles, on which the two presidents agreed at negotiations in Sochi on Friday, Russian Deputy Prime Minister Alexander Novak said.

“The presidents have agreed that we are beginning partial gas supplies and payments for them in rubles,” Novak told journalists.

Russia currently ships about 26 billion cubic meters of gas to Turkey annually.

“We are gradually switching to payments in national currencies, and part of the shipments will be paid for in Russian rubles now. This is a new stage indeed, which opens up new opportunities, including for the development of our monetary and financial relations,” Novak said.

Putin and Erdogan also discussed cooperation in the financial and banking sector, he said.

“Our commercial companies and our citizens should have an opportunity to pay [in national currencies] during their tourist trips and in the process of trade turnover,” Novak said.

Therefore, “the presidents discussed the financial-banking block, on which major agreements have been reached,” he said.

The NATO Nazis are very well advised to be concerned:

Western officials are “increasingly alarmed” that Turkey, a NATO ally and prospective EU member, is deepening its cooperation with Russia, the Financial Times has reported. Turkish President Recep Tayyip Erdogan recently returned from Sochi vowing to boost trade after talks with Russian President Vladimir Putin.

Six unnamed Western officials told the newspaper that they were “concerned” about the plans of Russia and Turkey to cooperate on trade and energy. One EU official said that Brussels was monitoring relations between Ankara and Moscow “more and more closely,” given how Turkey seems to be “increasingly” becoming a platform for trade with Russia.

Turkey has rejected its formal allies because its leaders are more concerned about its national interests than the fancy pants and lollipops promised them by the Prometheans; Erdogan also knows that the USA sponsored the failed coup that was aimed at unseating him two years ago and is giving refuge to the man who was intended as his replacement. So, the Turks have clearly decided to place their bets on the side of the BRICSIA economic alliance despite being members of NATO.

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A Quiet Response

In lieu of shooting down Nancy Pelosi’s plane, China opts for a considerably more brutal economic response:

For the past two days, there seemed to be no other news in the world than the visit of the speaker of the U.S. House of Representatives to Taiwan. Nancy Pelosi’s plane overshadowed both the fighting in Ukraine and the global financial and energy crisis. As a result, a representative of the American establishment did visit the island, and China confined itself to a series of extremely harsh political statements. This fact triggered an avalanche of alarmist statements from all kinds of experts trumpeting China’s strategic defeat. The emphasis was made exclusively on the military aspect, while completely overlooking the fact that we are talking about an Asian country, that is, a state with a different mentality, power system, political scenarios and approaches from the European one.

While everyone was watching the maneuvers and exercises of the PLA Navy, Beijing delivered an imperceptible, but perfectly calibrated and crushing blow. Since August 3, it has been strictly forbidden to send sand to Taiwan. For Taiwan, this is far worse than a direct military invasion and an amphibious landing.

The disruption of imported supply chains of construction sand and quartz sand could potentially send not only the Taiwanese economy, but the entire global electronics industry, from game consoles to the “brains” of modern missiles and fighter jets, into a deep knockout.

Watching the maneuvers of air units and warship formations off the coast of Taiwan is extremely fascinating. Anyone who has read the works of Sun Tzu understands that this is only a beautiful backdrop and that if you sit on your sandy shore long enough, one day an entire island will come to you.

Anyone who has read Unrestricted Warfare will not be surprised to see China eschew a direct and obvious response that would accomplish nothing but military escalation in favor of a more subtle asymmetric response that will cause severe strategic harm to its adversaries.

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Paul Krugman, Economics Whore

Not only is Krugman reliably wrong, now he’s perverting the very subject in which he is supposed to be an expert:

Economist and New York Times opinion writer Paul Krugman has been ruthlessly criticized after claiming the US was not in a recession and that the term ‘didn’t matter’ in a CNN interview Sunday. Krugman, 69, appeared on the network’s Reliable Sources talk show to discuss the state of the American economy, and was asked almost immediately by host Brian Stelter: ‘Are we in a recession and does the term matter?’

‘No we aren’t, and no it doesn’t,’ Krugman responded curtly. ‘None of the usual criteria that real experts use says we’re in a recession right now. And what does it matter? You know, the state of the economy is what it is.’

The response prompted a hail of criticism, particularly as it transpired late last week that US GDP shrank for the second quarter in a row – a popular marker of recession. A recession is defined as a ‘widespread and prolonged downturn in economic activity’, and was described in 2000 by former president Bill Clinton as ‘two quarters in a row of negative growth’.

At this point, I’m almost willing to believe that he’s just an actor, spouting off inane lines that have been written for him in support of the Narrative.

What criteria don’t indicate an economic contraction? The fact is that every economics metric has been so completely converged and redefined that they are no longer capable of providing any meaningful information whatsoever. For example, what use is an “employment rate” that eliminates people who aren’t working from the equation?

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An Ill-Conceived Policy

People are beginning to figure out that economic sanctions do not work, but they still haven’t figured out why:

Western sanctions against Russia are the most ill-conceived and counterproductive policy in recent international history. Military aid to Ukraine is justified, but the economic war is ineffective against the regime in Moscow, and devastating for its unintended targets. World energy prices are rocketing, inflation is soaring, supply chains are chaotic and millions are being starved of gas, grain and fertiliser. Yet Vladimir Putin’s barbarity only escalates – as does his hold over his own people.

To criticise western sanctions is close to anathema. Defence analysts are dumb on the subject. Strategy thinktanks are silent. Britain’s putative leaders, Liz Truss and Rishi Sunak, compete in belligerent rhetoric, promising ever tougher sanctions without a word of purpose. Yet, hint at scepticism on the subject and you will be excoriated as “pro-Putin” and anti-Ukraine. Sanctions are the war cry of the west’s crusade.

The reality of sanctions on Russia is that they invite retaliation. Putin is free to freeze Europe this winter. He has slashed supply from major pipelines such as Nord Stream 1 by up to 80%. World oil prices have surged and eastern Europe’s flow of wheat and other foodstuffs to Africa and Asia has been all but suspended.

Britain’s domestic gas bills face tripling inside a year. The chief beneficiary is none other than Russia, whose energy exports to Asia have soared, driving its balance of payments into unprecedented surplus. The rouble is one of the world’s strongest currencies this year, having strengthened since January by nearly 50%. Moscow’s overseas assets have been frozen and its oligarchs have relocated their yachts, but there is no sign that Putin cares. He has no electorate to worry him.

The interdependence of the world’s economies, so long seen as an instrument of peace, has been made a weapon of war. Politicians around the Nato table have been wisely cautious about escalating military aid to Ukraine. They understand military deterrence. Yet they appear total ingenues on economics. Here they all parrot Dr Strangelove. They want to bomb Russia’s economy “back to the stone age”.

I would be intrigued to know if any paper was ever submitted to Boris Johnson’s cabinet forecasting the likely outcome for Britain of Russian sanctions. The assumption seems to be that if trade embargos hurt they are working. As they do not directly kill people, they are somehow an acceptable form of aggression. They are based on a neo-imperial assumption that western countries are entitled to order the world as they wish. They are enforced, if not through gunboats, then through capitalist muscle in a globalised economy. Since they are mostly imposed on small, weak states soon out of the headlines, their purpose has largely been of “feelgood” symbolism.

A rare student of this subject is the American economic historian Nicholas Mulder, who points out that more than 30 sanctions “wars” in the past 50 years have had minimal if not counterproductive impact. They are meant to “intimidate peoples into restraining their princes”. If anything they have had the opposite effect. From Cuba to Korea, Myanmar to Iran, Venezuela to Russia, autocratic regimes have been entrenched, elites strengthened and freedoms crushed. Sanctions seem to instil stability and self-reliance on even their weakest victim. Almost all the world’s oldest dictatorships have benefited from western sanctions.

Whenever one’s logic is proven faulty, the correct response is to question the assumptions that underlie the syllogism. In the case of the repeated failure of economic sanctions, the false assumption is the beneficial nature of free trade. Sanctions intrinsically assume that trade is necessarily good for a nation in any and all circumstances, and therefore imposing sanctions that reduce the amount of trade will weaken the targeted nation.

This is a provably false assumption, as evidenced by the way in which economic sanctions have made Russia wealthier and stronger relative to its former trading partners. Economic sanctions don’t work because free trade doesn’t work.

This conclusive evidence of the failure of free trade dogma should inspire more economists to be skeptical of the claims of the comparative advantagists, but unfortunately, the history of economics suggests that it probably won’t.

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