Tag: economics

A fascinating confession

It appears the post-2008 economy has humbled, be it ever so slightly, the Nobel-prize winning economist, Paul Krugman:

[L]et me tell you about a dirty little secret of economics — namely, that we don’t know very much about how to raise the long-run rate of economic growth. Economists do know how to promote recovery from temporary slumps, even if politicians usually refuse to take their advice. But once the economy is near full employment, further growth depends on raising output per worker. And while there are things that might help make that happen, the truth is that nobody knows how to conjure up rapid productivity gains.

An interesting admission from a man who never saw a government spending program he didn’t like. The truth is that both the Neo-Keynesians and the Keynesian heretics that call themselves monetarists are up a conceptual creek without a paddle, because both their intellectual models reject the possibility that the quantity of debt can have anything to do with the economy’s ability to grow.

I realize that sounds ridiculously stupid, but it is nevertheless the case. And, as you may have noticed, events are proving otherwise.

The endless “temporary”

Paul Krugman asks why he is a Keynesian:

Noah Smith
sort-of approvingly quotes Russ Roberts, who views all macroeconomic
positions as stalking horses for political goals, and declares in
particular that

Krugman is a Keynesian because he wants bigger government. I’m an anti-Keynesian because I want smaller government.

OK, I’m not going to
clutch my pearls and ask for the smelling salts. Politics can shape our
views, in ways we may not recognize. But I’m aware of that risk, and
make a regular practice of asking myself whether I’m letting that kind
of bias slip in. In fact, I lean against studies that seem too much in
tune with my political preferences. For example, I’ve been aggressively
skeptical of studies that seem to show a negative relationship between
inequality and growth, precisely because that result is so convenient
for my political tribe (which doesn’t mean that it’s wrong.)

So, am I a Keynesian
because I want bigger government? If I were, shouldn’t I be advocating
permanent expansion rather than temporary measures? Shouldn’t I be for
stimulus all the time, not only when we’re at the zero lower bound? When
I do call for bigger government — universal health care, higher Social
Security benefits — shouldn’t I be pushing these things as job-creation
measures? (I don’t think I ever have). I think if you look at the
record, I’ve always argued for temporary fiscal expansion, and only when
monetary policy is constrained. Meanwhile, my advocacy of an expanded
welfare state has always been made on its own grounds, not in terms of
alleged business cycle benefits.

In other words, I’ve
been making policy arguments the way one would if one sincerely believed
that fiscal policy helps fight unemployment under certain conditions,
and not at all in the way one would if trying to use the slump as an
excuse for permanently bigger government.

This all sounds very well and good, except for one thing. Do you EVER recall Paul Krugman once calling for a REDUCTION in government spending at any point of the business cycle? Do you ever remember him recommending spending cuts or tighter monetary policy at all?

In 2013, Krugman wrote: “I’ve often argued on this blog and in the column that now is a particularly bad time to cut spending.” And this was four years into the Fed-reported economic recovery. Last year, he pointed out that “Prima facie, cutting spending depresses economies.” Even looking back to the heights of the 2007 and 1999 booms, I can’t find any evidence that Krugman called for fiscal contraction or anything but more spending and more taxes.

In any event, we already know why Krugman is a Keynesian. He read Foundation, he wants to be Hari Seldon, and Keynesianism permits him to wallow in the delusion of controlling future events.

Approaching endgame

Is there one last kick in the can? It doesn’t look like it:

Greece admitted its sovereign coffers are totally empty this week when it “bundled” its modest €345 million payment to the IMF along with others, for a lump €1.5 billion payment, which may well never happen.

And the bigger problem for Greece is that after testing yesterday the faith and resolve of its depositors (not to mention the Troika, aka the Creditors) and found lacking, said depositors no longer believe in the full faith (ignore credit) of the Greek banking system.It may have been the Greek government’s final test.

Because according to banking sources cited by Intelligent News, things today went from bad to horrible for Greek banks, when Greeks “responded with massive outflows to the Greece’s government decision to bundle the four tranches to IMF into one by the end of the June.”

According to banking sources, the net outflows sharply increased on Friday and the available liquidity of the domestic banking system reduced at very low and dangerous levels.

    The same sources estimate the outflows on Friday around 700 million Euros from 272 million Euros on Thursday. The available emergency liquidity assistance (ELA) for the Greek banks is estimated around 800 million Euros. In addition, the outstanding amount of the total deposits of the private sector (households and corporations) has declined under 130 billion Euros or lower than the levels at early 2004.

    The total net outflows in the last 7 business days are estimated 3.4 billion Euros threatening the stability of the Greek banks.

This means 2.5% of all Greek deposits were pulled in just the past 5 days! Indicatively, this is the same as if US depositors had yanked $280 billion from US banks (where total deposits amount to about $10.7 trillion)

Greece didn’t default yesterday because they said they would make the payment at the end of the month. It appears, however, that the government is merely giving the Greek people time to empty out their accounts so that they will not be bailed-in as creditors when the default takes place.

Economics 102 and remedial Theology

We begin with explaining the economic concept of “opportunity cost” to Jim Hines, John Scalzi, and Patrick Nielsen Hayden:

In the wake of Scalzi’s Big Book Deal, folks have been saying some rather ignorant or ill-informed stuff about how publishing works. I wanted to address a few of those points here.

Let’s start with the easiest, in which folks over on Theodore Beale’s blog claim that by Tor giving Scalzi a $3.4 million advance, they’re “squeezing out” approximately “523 initial advances to new science fiction authors.” In other words, Beale claims that “Patrick Nielsen Hayden and John Scalzi have combined to prevent more than 500 authors from getting published and receiving paid advances.”

This is a particularly egregious bit of ignorance coming from Mister Beale, who fancies himself a publisher.

Publishing is a business. As a business, Tor not only spends money on things like acquiring and publishing books, they also earn money by selling said books. Assuming Scalzi shut out 500 authors assumes that Tor is simply pissing away that $3.4 million. This is a rather asinine assumption. John Scalzi has repeatedly hit the NYT Bestseller list, earned a Best Novel Hugo, and has several TV/film deals in development for his work. Tor buys books from John Scalzi for the same reason they buy books from Orson Scott Card: those books sell a hell of a lot of copies, and earn Tor significant profits.

Very often it’s those profits — the income from reliable bestsellers like Card and Scalzi — that allow publishers to take a chance on new and unknown authors.

Let’s count the errors:

  1. Scalzi and PNH have combined to render it impossible for 523 new science fiction authors to break into mainstream publishing through Tor Books. This is a simple fact so long as we know that Tor does not have an unlimited amount of money at its disposal. The fact that Pan Macmillan just canned PNH’s counterpart at Tor UK “following a review of the company’s science fiction and fantasy publishing” should suffice to indicate that Tor’s advance budget is not limitless. The math is straightforward: PNH chose to give one author 13 advances of ~$250,000 per book rather than giving 523 authors $6,500 advances of the sort he gave John Scalzi for Old Man’s War. Any response that doesn’t take this into account is mere handwaving and evasion.
  2. I don’t fancy myself a publisher. I am very pleased to have the privilege of publishing John C. Wright, Jerry Pournelle, Eric Raymond, Tom Kratman, Sarah Salviander, Jonathan Moeller, Rolf Nelson, Martin van Creveld, and William S. Lind, among others. And we expect to announce the publication of several big names from the game industry soon.
  3. Observing that Scalzi financially shut out 500+ authors does not assume that Tor is simply pissing away that $3.4 million. Those authors are now shut out whether Scalzi sells millions of books or none at all. If Tor is pissing away that $3.4 million, it is the authors now being published by Tor who will be shut out in the future. Tor is literally betting their careers on Scalzi. I expect some will like that gamble, others not so much.
  4. The opportunity cost of a choice is the value of the best alternative forgone, in a situation in which a choice needs to be made between several mutually exclusive alternatives given limited resources. We’ve already established that Tor’s resources are limited. So, the question is not whether John Scalzi’s next 13 books “sell a hell of a lot of copies, and earn Tor significant profits”, but if those 13 books will sell MORE copies, and earn Tor MORE significant profits, than the books from other authors Tor otherwise might have signed.
  5. Tor bought Scalzi’s various one-and-done appearances on the oft-gamed NYT Bestseller list. The idea that Fuzzy Nation was ever more popular than Old Man’s War
    or sold more copies is downright risible. To cite Tor’s past
    marketing efforts as justification for the new authors it has decided not to publish is a category error. It’s a sunk cost of trivial
    benefit going forward, not that Hines likely knows what a “sunk cost” is. As for the appeal to the Hugo Award, I’m going to give McCreepy the benefit of the doubt and assume that’s sarcasm.

Remember, each new author doesn’t have to outsell Scalzi to generate opportunity cost. The breakeven on units for each book is 2.5 percent of Scalzi’s individual book sales. Assuming the average new Tor writer sells 10,000 books, (and the biggest publisher in SF had better be able to sell that many) that means each of the 13 Scalzi books has to sell at least 402,308 copies for Tor to break even on the opportunity cost from a reasonable unit sales perspective. And each new author who proves capable of selling more than 10k copies only makes the decision that much worse for Tor. You will notice that none of the Scalzi allies attempting to defend the deal ever bother to work through the actual math of it, preferring to rely instead on general phrases like “a hell of a lot”.

However, there are two very real and even significant justifications for preferring 13 John Scalzi
books to 523 new author books even if the future sales estimates tend to favor the latter. Hines doesn’t bring them up, presumably because they highlight my point
about how there are 3.4 million reasons the deal is shutting out new authors. It is more expensive, and
therefore less profitable, to edit, print, and distribute 523 different
authors than one. Even if we use the EFA’s very conservative guidelines and assume an unrealistically low production amount of $5,000 per book, those 523 authors would cost Tor at least $3 million more in production costs than producing John Scalzi’s 13 books will.

Furthermore, there are a limited number of available slots in the retail channels, even for Tor. Barnes & Noble is not going to endcap 500 different Tor books; they probably don’t even carry that many in total. But again, this supports my larger point about how the increased centralization of traditional publishing tends to lock out new authors and midlist authors alike. That was why I stopped even talking to traditional publishers years ago; as a midlist author who sold 30k to 40k copies per book, I knew I was of little interest to them. These days, if you can’t at least threaten six digits in your two chances at publication, you will need to be a gatekeeper’s pet in order to stay in traditional print for long. The dirty little secret of traditional publishing is that its profits are no less dependent upon constant churn than the average stockbrokerage.

And this points to the best part of what increasingly looks like a pretty good deal for Scalzi: he is locking in Tor’s marketing focus on his behalf, although again, at the expense of its other authors. And that, combined with what we have learned about Pan Macmillan’s unhappiness with its editorial product in the UK, leads me to suspect that PNH is feeling the heat from above and has therefore thrown a bit of a Hail Mary in order to buy himself more time.

Since we’re on the subject of openly clueless statements about me at File 770, let’s address two of their creative takes on theology while we’re at it:

CPaca on June 1, 2015 at 3:27 pm said:
VD isn’t a Christian, despite claiming he is. The belief that Satan rules the world instead of God is some form of Christian Gnostic heresy. One has to wonder if Wright is fully aware of who he’s hanging out with.

If this were a science fiction novel, the dialogue would end here, with the Atheist Who Knows the Bible Better than the Bible-Thumping Bigot gloriously triumphing. Of course, this isn’t a science fiction novel, and in fact, their knowledge of Christianity literally doesn’t rise to the level of Out of the Silent Planet. Do they not even understand what “Silent Planet” means? Do they not truly not understand the entire purpose of the Word made flesh, much less the Crucifixion?

The belief that Satan rules the world is the very essence of Christianity!

Again, the devil took him to a very high mountain and showed him all the kingdoms of the world and their splendor. “All this I will give you,” he said, “if you will bow down and worship me.” Jesus said to him, “Away from me, Satan! For it is written: ‘Worship the Lord your God, and serve him only.’
-Matthew 4:1-11


But very truly I tell you, it is for your good that I am going away. Unless I go away, the Advocate will not come to you; but if I go, I will send him to you.  When he comes, he will prove the world to be in the wrong about sin and righteousness and judgment:  about sin, because people do not believe in me;  about righteousness, because I am going to the Father, where you can see me no longer;  and about judgment, because the prince of this world now stands condemned.
– John 16:7-11

The god of this age has blinded the minds of unbelievers, so that they cannot see the light of the gospel that displays the glory of Christ, who is the image of God.
– 2nd Corinthians 4:4

Stevie on June 1, 2015 at 3:56 pm said:
I think we agree that VD is not a Christian; I think that VD would happily abandon his not very good grasp of Gnosticism on the grounds of ‘rhetoric’, or ‘Aristotle’, or whatever flavour of evasion he happens to feel like at any given time. Given his obsessive hatred of John Scalzi I suspect that VD cheers himself up by imagining him as ‘left behind’.

Sadly, Wright’s track record as a professed Christian suggests that he doesn’t understand Christianity either; his appalling outburst about Terry Pratchett is wholly incompatible with Christ’s commandment that we should love each other. Wright appears to be under the impression that Christ really didn’t understand being God, and that Wright has much better ideas as to what God actually wants than the reprobate who spent his time with the poor, the sick, the hungry, and consorted with dreadful people like tax collectors…

I can’t abandon what I don’t have. And as for the idea that John Wright’s rejection of the late Pratchett’s euthanasia activism is somehow incompatible with Christianity, that is simply false. Terry Pratchett was not only, as Neil Gaiman described him, a very angry man, he was a very wicked and cowardly man.

You have loved righteousness and hated wickedness; therefore God, your God, has set you above your companions by anointing you with the oil of joy.
– Hebrews 1:9

But it is true that as a man outside the Church, we should not judge him; God will do that. In any event, the extent and intensity of their hatred for me should suffice to testify as to whether I am a Christian or not.

If the world hates you, keep in mind that it hated me first. If you belonged to the world, it would love you as its own. As it is, you do not belong to the world, but I have chosen you out of the world. That is why the world hates you.
–  John 15:17-19

Let them hate. I never forget who they hate first and foremost.

The can resists the kickers

Greece appears almost ready to do what they should have done years ago and default:

Greek premier Alexis Tsipras has accused Europe’s creditor powers of issuing “absurd demands” and come close to warning that his far-Left government will detonate a pan-European political and strategic crisis if pushed any further.

Writing for Le Monde in a tone of furious defiance after the latest set of talks reached an impasse, Mr Tsipras said the eurozone’s dominant players were by degrees bringing about the “complete abolition of democracy in Europe” and were ushering in a technocratic monstrosity with powers to subjugate states that refuse to accept the “doctrines of extreme neoliberalism”.

“For those countries that refuse to bow to the new authority, the solution will be simple: Harsh punishment. Judging from the present circumstances, it appears that this new European power is being constructed, with Greece being the first victim,” he said.

The Greek leader, head of the radical-Left Syriza government, issued a stark warning that his country will not submit to these demands and will instead take action “to entirely transform the economic and political balances throughout the West.”

Alexis Tsipras made his thoughts known in a piece for Le Monde, the French newspaper

“If some, however, think or want to believe that this decision concerns only Greece, they are making a grave mistake. I would suggest that they re-read Hemingway’s masterpiece, “For Whom the Bell Tolls”,” he said.

Hey, the debt-funded Euro party was fun. But it’s over. Now it’s time to default, bring back the drachma, and return to the world of real world economics.

We’re going to need a bigger facepalm

More brilliance from the genius-commenters at File 770. Seriously, what you have to remind yourself whenever you read them is to keep in mind that they quite genuinely believe that they are our intellectual betters. It makes everything much, much funnier.

Glenn Hauman on May 25, 2015 at 9:51 am said:
Stevie: The deal with Tor means that Scalzi gets to write, and all the other stuff is done by Tor who are better at it than Scalzi is; VD is too egotistical to accept that he isn’t the best at everything he does. Scalzi certainly has a healthy ego but he’s got the brains to know that it doesn’t make any sense to spend his time doing something which other people do better

More, that implies that Beale has never heard of Ricardo’s theory of comparative advantage, which states that you should be doing what you’re best at even if you do other things better than other people, as it’s a waste of your efforts otherwise. Surprising for Beale to claim to be so well versed in economics and yet be ignorant of a basic tenet of the field.

I wonder what Mr. Hauman believes I was addressing when I wrote the column entitled The Religion of Free Trade, which begins in the following manner:

Let us suppose I told you of a certain doctrine in which millions of people believe without ever having read the book in which it is contained, which is predicated upon a situation that has never existed, and promises positive consequences that not only have never been delivered, but we are told cannot even be measured and cannot be realized without achieving something that has never been done before in the history of Man. Furthermore, the doctrine was developed by a gambler and politician with absolutely no credentials or qualifications on the subject, which subject he had never encountered before the age of 27, in tandem with a related theory that is so obviously insane that barely anyone has ever even heard of it.

So long as we are careful to set aside any reliance upon the genetic fallacy, does this sound like a doctrine that is not only infallible, but one that it would be crazy to even consider questioning? And yet, the fervor with which the advocates of the free-trade doctrine defend David Ricardo’s outdated, disproven theory of comparative advantage and decry those who question it is so ferocious as to indicate the nature of a belief that can only be described as religious.

David Ricardo was without question a brilliant and successful man, but what is much less often noted is how intellectually dishonest he was. In a previous WND column, titled Free Trade Harms America, I showed how Joseph Schumpeter labeled his peculiar and tautological method of argument the “Ricardian Vice.” Furthermore, he was not even the original author of the theory of Comparative Advantage, it having been first introduced by Robert Torrens in “An Essay on the External Corn Trade” two years before Ricardo transformed a specific argument for a specific situation into something passing for a general principle, which he published in “On the Principles of Political Economy and Taxation.”

Truly, my ignorance on the subject, which I also addressed in 2010 and in 2014, astounds. The theory of Comparative Advantage also came up in my interview with Ian Fletcher, who has devoted a considerable amount of time and effort to utterly demolishing Ricardo.

Remember, SJWs always lie. And perhaps more importantly, we again see an example of the midwit having so little ability to grasp what his intellectual superior is saying that he erroneously assumes stupidity and ignorance on said superior’s part. As it happens, I am probably one of the 100 people on the planet most equipped to discuss David Ricardo’s theory of comparative advantage in critical detail, so it is vastly amusing to see Mr. Hauman assert that I am “ignorant of a basic tenet of the field.”

Perhaps Mr. Hauman, being such a noted expert in Ricardian theory, would do us all the favor of calculating the real value of Mr. Scalzi’s new contract based on the only true determinant of profit.

And just to be clear, if you are not one of the five people reading this who understand the reference, that is a joke.

Immigration = unemployment

It’s always fascinating how economists who like nothing better than to cite the Law of Supply and Demand turn around and claim that increasing the labor supply by nearly 20 percent neither reduces average wages nor native employment:

The number of foreign-born workers kept rising. Last year, there were 25.7 million in the U.S., up from 25.3 million in 2013. They accounted for 16.5% of the labor force in 2014, up from 16.3% the year before and 15.5% in 2009, the year the recovery began.

The foreign-born worker labor-force participation rate—the share aged 16 and older working or looking for work–was 66.0% in 2014, higher than the native-born rate of 62.3%. Foreign-born workers are more likely than native-born workers to be male and more likely to be between the ages of 25 to 54, ages when the participation rate is highest, according to the BLS.

About 48.3% of the foreign-born workers in 2014 were Hispanic and 24.1% of them were Asian last year, according to BLS. The composition of foreign workers has shifted since 2009, with Hispanics’ share decreasing and Asians’ rising.

Foreign-born workers saw their median usual weekly earnings rise to $664 in 2014, up from $643 in 2013. The difference between the weekly earnings of foreign-born workers and their native-born counterparts narrowed slightly as well from $162 in 2013 to $156 in 2014. The earnings gap peaked at $173 in 2010 and has been trending down since.

Since 20 percent of the US labor force is non-American, it should be no surprise that the number of Americans now outside the labor force has increased dramatically in line with the increase in immigration.

This shouldn’t be rocket science. Let’s use a reductio ad absurdum to explain. If 100 percent of the labor force is foreign-born, what percent of native-born Americans have jobs?

a) 100
b) zero
c) mu

The immigrants aren’t even that much cheaper, as their median usual weekly earnings are 81 percent of the native-born workers. If we assume that employers are unable to spend any more money on employment than they already are, that means that immigrants are responsible for putting 20.8 million Americans out of work.

Credit is money

Shades of the old inflation/deflation debate. Zerohedge points out the vast imbalance between credit money and cash.

1)   The total currency (actual cash in the form of bills and coins) in the US financial system is a little over $1.36 trillion

2)   When you include digital money sitting in short-term accounts and long-term accounts then you’re talking about roughly $10 trillion in “money” in the financial system.

3)   In contrast, the money in the US stock market (equity shares in publicly traded companies) is over $20 trillion in size.

4)   The US bond market  (money that has been lent to corporations, municipal Governments, State Governments, and the Federal Government) is almost twice this at $38 trillion

5)   Total Credit Market Instruments (mortgages, collateralized debt obligations, junk bonds, commercial paper and other digitally-based “money” that is based on debt) is even larger $58.7 trillion.

6)   Unregulated over the counter derivatives traded between the big banks and corporations is north of $220 trillion

When looking over these data points, the first thing that jumps out at the viewer is that the vast bulk of “money” in the system is in the form of digital loans or credit (non-physical debt).

Put another way, actual physical money or cash (as in bills or coins you can hold in your hand) comprises less than 1% of the “money” in the financial system.

The simple facts tend to make the whole “war on cash” concept look absolutely absurd, as well as entirely obvious that it is about political control, not economic growth. The reason the central banks want to ban cash is because the credit money system is on the verge of collapse and they see it as a straw that could nevertheless cause the whole damn thing to collapse.

Which, of course, it is going to do anyhow. The map is not the territory and it will never be the territory.

A historic privilege

In his landmark economics textbook, Paul Samuelson pointed out that domestic debt did not matter in the aggregate, with one notable exception.  He wrote: “The
interest on an internal debt is paid by Americans to Americans; there
is no direct loss of goods and services. When interest on the debt is
paid out of taxation, there is no direct loss of disposable income; Paul
receives what Peter loses, and sometimes – but only sometimes – Paul
and Peter are one and the same person…. In the future, some of our
grandchildren will be giving up goods and services to other
grandchildren. That is the nub of the matter. The only way we can impose
a direct burden on the future nation as a whole is by incurring an
external debt or by passing along less capital equipment to posterity.”

Setting aside whether it matters or not who owes what to whom, the recent report on external debt owed would therefore appear to be not entirely irrelevant in this regard.

The Treasury Department says overseas ownership of U.S. debt rose 2.1 percent in March to $6.18 trillion. That is below January’s record of $6.22 trillion. China added $37.3 billion of Treasury debt, bringing its stockpile to $1.26 trillion. That’s ahead of Japan, which added just $2.5 billion, lifting its total to $1.23 trillion.

In February, Japan became the leading owner of U.S. debt for the first time since August 2008. China overtook Japan that year as the Great Recession, higher government spending and a steep drop in tax revenue pushed up U.S. government borrowing.

As of the end of 2014, US government debt outstanding stood at $13 trillion. That means that with $6.18 trillion of it owed externally, 47.5 percent of the US public debt is of the sort that, even in Keynesian/Samuelsonian terms, imposes a direct burden on the future nation as a whole. And when you consider that the future USA – one can hardly call it a “nation” at this point – will be less white, less intelligent, and less productive on average, it should be readily apparent that the economy has absolutely no chance of growing itself out of the external debt owed regardless of which economic school of thought you belong.

What we are witnessing is nothing less than the gradual demise of the biggest, wealthiest economy in world history. It is truly a privilege and an education to behold. It is rather like being able to witness the death of the last Tyrannosaurus Rex. Regardless of how the fallout from the event may affect us personally, we have seen and experienced something that very few men have ever known.

I still remember living in Japan at the height of the Heisei Boom; I flew out of Narita less than five months before the consumption tax and the first round of monetary tightening marked the peak of that Golden Age and brought it to an end. In nearly three decades since, Japan has never again approached those heights of ease and luxury. Now we are looking at much the same thing, albeit on a considerably larger scale. But rather than mourn the recent past, we should appreciate it for the rare moment in history it was.

The Hobbesian Law was never abolished, it was merely held in abeyance for a time.

Christianity: the predictive model

It’s somewhat remarkable that so many people refuse to grant the Bible any credence when it is observably the single greatest long-term predictive document ever known to Man:

 A proposed new law in Denmark could be the first step towards an economic revolution that sees physical currencies and normal bank accounts abolished and gives governments futuristic new tools to fight the cycle of “boom and bust”.

The Danish proposal sounds innocuous enough on the surface – it would simply allow shops to refuse payments in cash and insist that customers use contactless debit cards or some other means of electronic payment.

Officially, the aim is to ease “administrative and financial burdens”, such as the cost of hiring a security service to send cash to the bank, and is part of a programme of reforms aimed at boosting growth – there is evidence that high cash usage in an economy acts as a drag.

But the move could be a key moment in the advent of “cashless societies”. And once all money exists only in bank accounts – monitored, or even directly controlled by the government – the authorities will be able to encourage us to spend more when the economy slows, or spend less when it is overheating.

The idea that “high cash usage” in an economy acts as a drag is absolutely and utterly absurd when examined from the perspective of several economic schools. Even the Keynesian school, which will be in favor of banning cash in favor of more easily manufactured nonexistent numbers, teaches that Savings = Investment. Is getting rid of savings, and therefore investment, really going to strengthen the economy?

What this is really designed to do is to address the problem seen in the chart from yesterday’s post that shows the massive decline in debt growth from 1985 to 2015. As the production of credit money declines with the inability of consumers and corporations to take on more debt, other less productive sources are being tapped to keep the government beast alive. Hence their pursuit of even the coins under granny’s couch.

The real nightmare isn’t the economic abomination of the authorities playing a disastrous push-pull with the entirety of the money supply, though, it is the establishment of the infrastructure for the long-predicted Mark of the Beast. And it would be very interesting to hear a disbeliever explain how such an unlikely creation could have been envisioned so clearly nearly two thousand years ago.