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Thursday, June 22, 2017

Open Brainstorm with Steve Keen

Last night, we held a Brainstorm with Steve Keen and discussed his new book, Can We Avoid Another Financial Crisis? And his answer was clear: that depends upon what you mean by "we", kemosabe. TL;DR: in a global context, no, we cannot avoid it, but it should be about half as bad as 2008. And we'll probably get 6-12 months of warning from his model.

As usual, Professor Keen was brilliant, informative, and entertaining. And now that he's embarked on a paper relating to David Ricardo and free trade, I don't think he'll object to me posting the email he sent me a few months ago when I asked him about the implications for free trade of the demand-based break between micro and macro caused by the Sonnenschein-Mantel-Debreu theorem. Or, as I memorably renamed it last night, Sonnensomething-Niederbopp-Whatever.
In this context the key point of the Sonnenschein-Mantel-Debreu theorem is not the failure to derive a demand curve, but the inability to represent the interests of everyone in a single country using a “Community Indifference Curve”, which is an essential part of the Hecksher-Ohlin model of free trade, which has of course supplanted Ricardo’s original model.

Samuelson’s defence of doing so is frankly comical, and also highlights one of the two key weaknesses of the model: it only works if income or wealth is compulsorily redistributed to equalise the “ethical worth” of every dollar earned/possessed, and he thought this was a reasonable assumption. From "Social Indifference Curves", Paul Samuelson, 1956
  1. It is shown that the various defenses which have been offered for the use of community indifference curves are all open to some serious questioning.
  2. The Scitovsky community indifference contours are shown to be "minimum social requirements" contours of total goods needed to achieve a certain prescribed level of ordinal well-being for all. The dual properties of the Figures Ia and Ib, relating points in the commodity and ordinal-utility spaces, are demonstrated.
  3. By means of mathematical reasoning or by the demonstration of intersections of Scitovsky contours, a fundamental impossibility theorem is proved: Except where income elasticities are all unity and tastes are absolutely uniform for all, it is proved to be absolutely impossible to solve for unique market price ratios in function of market totals; hence, we must lack collective indifference curves capable of generating group demand.
  4. All this is shown to entail the nonoptimality of any shibboleth rule which once and for all and independently of changes in technology and taste data predetermines the initial distribution of income or endowments.
  5. Since most "individual" demand is really "family" demand, the argument can be made that such family demands have been shown to have none of the nice properties of modern consumption theory. However, if within the family there can be assumed to take place an optimal reallocation of income so as to keep each member's dollar expenditure of equal ethical worth, then there can be derived for the whole family a set of well-behaved indifference contours relating the totals of what it consumes: the family can be said to act as if it maximizes such a group preference function.
  6. The same argument will apply to all of society if optimal reallocations of income can be assumed to keep the ethical worth of each person's marginal dollar equal. By means of Hicks's composite commodity theorem and by other considerations, a rigorous proof is given that the newly defined social or community indifference contours have the regularity properties of ordinary individual preference contours (nonintersection, convexity to the origin, etc.).
This is the key problem from the demand side: free trade is only universally of benefit to a given nation if the gains are shared; this requires redistribution mechanisms in addition to the market, which both don’t exist, and contradict the model of free competition if they were to be implemented.

The key problem for the supply side is easily stated: How do you turn a wine press into a spinning jenny (to use Ricardo’s examples). The standard model assumes the costless reallocation of capital between industries in response to a change in relative prices caused by reducing tariffs. But this is impossible. Capital is physical and attuned to specific industries. Free trade therefore makes obsolete some capital in a protected industry, while making that in a benefited industry more expensive, but not more productive.

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48 Comments:

Anonymous Jeff June 22, 2017 7:13 PM  

I hope Mr. Keen was serious when he accepted the publishing deal with Vox!

Anonymous Takin' a Look June 22, 2017 7:19 PM  

Another of Keen's admirers

https://vidrebel.wordpress.com/2017/06/10/update-americas-secret-multi-trillion-dollar-black-ops-slush-fund/

Blogger DeploraBard June 22, 2017 10:18 PM  

Vox,
I came in at the end of the Webinar. Hopefully it be released to watch from the beginning. I am particularly interested in his theory that the micro does not affect the macro. I was a little surprised. Is that covered in his book? He/you used the drop of water analogy in the ocean. All of it is water (same molecular structure), but each drop is unique and contributes to the whole. Same for humanity. Billions of individuals that make up economies that are extremely complicated to predict because of this? Seems like extreme individual micro outliers could affect the macro (Gates, Soros, etc.) Curious if this could apply to other areas, such as spiritual influence, or just economic theory. Funny that he laughed at the "Because F you" on Trump.

Blogger Aeoli Pera June 22, 2017 11:17 PM  

Good times.

Anonymous Roundtine June 22, 2017 11:18 PM  

The macroeconomists who try to stack demand curves claim they are lines, such as the standard demand line that falls as price rises. But the math says demand curves can actually have any shape.

Blogger Jack Ward June 22, 2017 11:53 PM  

Excellent and engrossing, this one. Mr. Keen seemed surprised at Castalia's percentage to author, and, he absolutely perked up with mention of the Ilk minion programmers that might make his ideas become fruitful. There may be a new guy on Castalia's listing soon. All together well done. And, it was nice listening to the publishing recruitment just before it the webniar proper started.

Blogger Kristophr June 23, 2017 1:58 AM  

It is too late to avoid a crisis.

We are living in a huge US dollar bubble, right now.

Best possible result right now is to default, re-monitize, implement austerity policies, and accept the resultant depression.

Worst case is Weimar Republic grade hyperinflation, civil collapse, and killing your nieghbor with a human thigh-bone for that last bowl of tree-bark soup.

Blogger Nerzenjäger June 23, 2017 2:24 AM  

I hope JudeoChrist will post it on Youtube.

OpenID aew51183 June 23, 2017 5:28 AM  

The refutation of free trade doesn't require complicated criticism or models, it just requires common sense:

Let's take the most charitable assumptions of free trade: Comparative advantage is taken at face value, as is specialization and the premise a nation will have something in which to specialize.

Now, what if you're American and want to go into a field America is NOT "specialied" in due to "comparative advantage"? What you're an American woman and want to go into textiles, which tend to be in islamic nations like Pakistan?

Now you must submit to a culture which declares you chattel just to get a job?

The stupidity of applying the micro-scale concept of "division of labor" to the macro scale of geopolitics without bothering to take into account radically different cultures is absurd on its face.

Anonymous Rocklea June 23, 2017 6:42 AM  

So, no Venus Project then. Thats disappointing, Zeitgeist was a great SF/F movie.

Blogger Stilicho June 23, 2017 6:43 AM  

Macro is the aggregate of all micro and it is foolish to expect the ocean to look like a drop of water. The biggest problem of the econometricians is that they embrace the Ricardian vice in trying to describe and predict macroeconomic behavior to the extent that they "assume" the ocean down to single drop.

Blogger Stilicho June 23, 2017 6:50 AM  

Keen's model will likely be better than most because he tries to avoid a similar trap. His problem lies in the fact that he has already decided what the solution should be before he puts pen to paper. As Vox has pointed out, Keen is a brilliant critic. However, he does not employ the same intellect or academic rigor to finding solutions. His solution always comes down to Moar Staten Moar Govt. You plebs just cannot handle freedom.

Blogger Lazarus June 23, 2017 6:58 AM  

Nerzenjäger wrote:I hope JudeoChrist will post it on Youtube.

Brainstorms are pay-to-play features.

Blogger Johnny June 23, 2017 7:05 AM  

Forgetting about the overall economic this and that, we are not going to avoid another banking crises because we really don't want to. Or to put it more softly, the social circumstance does not support the gov doing what would need to be done to make banks sound. The problems are:

1) On a federal level we sponsor easy credit, which means loans that are weak and in any downturn will go bad. Really it is a kind of covert deficit spending. If you borrow your deadbeat uncle money that you know will not get paid back, you are not borrowing, you are giving. And it is not the gov guaranteeing loans, it is the gov covertly spending.

2) Big banks in particular are undercapitalized. Thus they do not adsorb the cost of loans going bad, we do.

3) There used to be a business cycle that was driven by a boom that had accumulating debt, followed by a bust with credit tightening and economic decline. Now with the gov covertly or directly guaranteeing all large scale borrowing we never have the bust. But what we do have is an accumulating debt bubble that is getting crazy big. Gonna be something when the thing pops. Or maybe we will end up with an administered economy more typical of communist countries where the gov allocates credit and routinely bails out favored bad debtors to the expense of everybody else.

Anonymous basementhomebrewer June 23, 2017 7:20 AM  

Johnny wrote:2) Big banks in particular are undercapitalized. Thus they do not adsorb the cost of loans going bad, we do.

You are also missing that Uncle in 1 tends to be the banks themselves and #2 isn't really a business or home loan but a risky investment the banker took a chance on. When talking about big banks the easy credit from the Feds it tends to go to brokerage, not business loans or personal loans.

Blogger Johnny June 23, 2017 7:56 AM  

basementhomebrewer wrote:Johnny wrote:2) Big banks in particular are undercapitalized. Thus they do not adsorb the cost of loans going bad, we do.

You are also missing that Uncle in 1 tends to be the banks themselves and #2 isn't really a business or home loan but a risky investment the banker took a chance on. When talking about big banks the easy credit from the Feds it tends to go to brokerage, not business loans or personal loans.




Instead of the sweeping vagaries, lets go into the actual particulars of one category of loan, home loans. The government pressures banks into race norming home loans. As minority borrowers are less financially sound a certain number of these loans will go bad. As a result essentially all banks in minority areas have weak loan portfolios, which is to say loans that are likely to go bad. And bad loans are typically what terminates a bank.

But no problem. The bank packages these into huge credit instruments and sells them collectively. They are easy to market because federally sponsored loan agencies (Freddie Mack, Fannie Mai) guarantee the debt to be good. No federal guarantees in any of this, but realistically the loan package has to be kept solvent or the economy will go into the sewer and your local congressmen might not get reelected. Horror the thought.

The current bailout method is for the Federal Reserve in times of crises buy the loan package at face value regardless of real value, effectively and covertly relieving the banks of their bad loan practices, practices that are sponsored by the government itself.

It all comes down to covert deficit spending. Minority groups get easy credit at federal expense with banks the agency that allocates the easy credit.

Anonymous Jeff June 23, 2017 8:21 AM  

Keen is right about the US federal government debt. The whole thing could be paid off today in one giant QE (i.e. asset swap) operation with minimal inflationary consequences.

The private sector debt should be the focus (and local govt debt. Vox was right about that).

Blogger phunktor June 23, 2017 8:24 AM  

Deplorabard: the micro-macro dialectic is touched on in interesting ways by the physics concept of "spin glasses".

Blogger DeploraBard June 23, 2017 8:30 AM  

Will look into it. Thanks.

Blogger James Dixon June 23, 2017 8:31 AM  

> Can We Avoid Another Financial Crisis?

I suspect it's not so much a question of can, but rather a question of will. And simply knowing that answers the question for you.

> Forgetting about the overall economic this and that, we are not going to avoid another banking crises because we really don't want to.

Bingo.

> Or to put it more softly, the social circumstance does not support the gov doing what would need to be done to make banks sound.

It's worse than that. To be sound the banks would have to be fully capitalized. That is, one dollar of reserves for every dollar loaned out. You can't do that and have fractional reserve banking. By definition our banks are unsound.

Since society (and especially the banker portion of same) seems to want fractional reserve banking, the correct question is "Exactly what degree of unsoundness in our banks are we willing to accept?". At the moment, the answer seems to be quite a lot.

Blogger DeploraBard June 23, 2017 8:47 AM  

Can these models consider deliberate unsoundness and manipulation? I wouldn't think so as they can take any form thus making them impossible to predict.

Blogger Dole June 23, 2017 8:54 AM  

Aah, really wished I could have attended this one, missed it completely.

Anonymous 罗臻 June 23, 2017 9:01 AM  

The models can take manipulation into account because they are macro models. Manipulation shows up somewhere.

Keen has a simple model which he talked about in the brainstorm, the acceleration of credit. It is a total demand model where demand is GDP + credit. I used it to do simple model showing how China cannot deleverage and maintain GDP growth. You can download the spreadsheet of Australia that Keen made and input whatever country's data you want.

Anonymous basementhomebrewer June 23, 2017 9:06 AM  

Johnny wrote:basementhomebrewer wrote:Johnny wrote:2) Big banks in particular are undercapitalized. Thus they do not adsorb the cost of loans going bad, we do.

You are also missing that Uncle in 1 tends to be the banks themselves and #2 isn't really a business or home loan but a risky investment the banker took a chance on. When talking about big banks the easy credit from the Feds it tends to go to brokerage, not business loans or personal loans.


Instead of the sweeping vagaries, lets go into the actual particulars of one category of loan, home loans. The government pressures banks into race norming home loans. As minority borrowers are less financially sound a certain number of these loans will go bad. As a result essentially all banks in minority areas have weak loan portfolios, which is to say loans that are likely to go bad. And bad loans are typically what terminates a bank.

But no problem. The bank packages these into huge credit instruments and sells them collectively. They are easy to market because federally sponsored loan agencies (Freddie Mack, Fannie Mai) guarantee the debt to be good. No federal guarantees in any of this, but realistically the loan package has to be kept solvent or the economy will go into the sewer and your local congressmen might not get reelected. Horror the thought.

The current bailout method is for the Federal Reserve in times of crises buy the loan package at face value regardless of real value, effectively and covertly relieving the banks of their bad loan practices, practices that are sponsored by the government itself.

It all comes down to covert deficit spending. Minority groups get easy credit at federal expense with banks the agency that allocates the easy credit.


Correct but that is just the tip of it. If they hadn't been packaged as financial instruments then the failures would have been localized rather than centralized into the big banks. The other compounding factor was that the big banks were trading those financial instruments on credit themselves. That translates to bad credit following bad credit.

This problem isn't unique to home loan financial instruments. This is in every market. It's why amazon has had such a ridiculous price on their stock from the inception of the company. This is also occurring in the commodities markets. Essentially the valuation of virtually anything traded in an exchange market is way over it's real value. This is because all of it is being done on credit.

Blogger wreckage June 23, 2017 10:57 AM  

Pity I missed this.
I'd really like to see a comparison done between:

Current theory macro.

Current theory macro with energy costs at 10* substitution.

Historical performance of protectionist strategies.

My own understanding is the latter fail, because they don't change any underlying influences, they effectively simply scrape resources from elsewhere and dump them in the noncompetitive hole.

So conventional protectionism is neither micro nor macro, just another form of credit spending, only instead of borrowing from the future and never paying it back, it borrows laterally and never pays it back. Same results, though.

Does anyone have any ideas that could create a "shaped" market that wasn't just a smokescreen generated by burning money?

Blogger Cicatrizatic June 23, 2017 11:41 AM  

This comment has been removed by the author.

Blogger Cicatrizatic June 23, 2017 11:42 AM  

@17. Jeff.

"Keen is right about the US federal government debt. The whole thing could be paid off today in one giant QE (i.e. asset swap) operation with minimal inflationary consequences."

While I agree that this could be accomplished as stated, wouldn't it create significant asset inflation in stocks and real estate? All creditors of the US government swap their treasuries for new deposit money created by the Fed. Won't those creditors (Chinese banks, US insurance companies, various sovereign wealth funds) then invest that money in stocks, real estate, or other dollar denominated assets?

Blogger James Dixon June 23, 2017 12:33 PM  

> My own understanding is the latter fail, because they don't change any underlying influences,

A simple tariff protectionist scheme has historically been rather successful. As I understand it, that's what we had for much of our history. Others here can argue that matter better than I can though.

Remember that the historic solution to unreasonable tariffs and import limitations was smuggling, and that that it tended to be effective. Simply look at drugs in the US as a real world example.

Anonymous map June 23, 2017 12:47 PM  

The biggest point that all of you are missing is that the last two recessions were caused by the Federal Reserve. It's the Federal Reserve that caused crashes in 2003 and 2008, where, in its opinion, the stock markets and the housing markets were too "hot" so they raised the federal funds rate to over 5%, causing the destruction in stock and housing markets.

Say what you will about the CRA and the low-grade debt to minorities, but all of that would've been manageable if the fed funds was not deliberately raised to over 5%. That means that people's ARMS adjusted to nearly 10%. That is what caused the massive market slide.

Our credit markets are completely controlled by the Federal Reserve and our economy goes up and down based on the whims of Janet Yellen. The spread between the prime rate and the federal funds rate has been fixed at 3% since 1993.

Anonymous Roundtine June 23, 2017 12:51 PM  

Does anyone have any ideas that could create a "shaped" market that wasn't just a smokescreen generated by burning money?

The point isn't to pick winners and losers, but add some protection such as a flat tariff. Paul Ryan's border adjustment tax is a version of this. It will cost more to buy imported goods under his bill, and it would be cheaper to export.

Some protection of key industries may be needed. Take aircraft manufacturing. What Japan did, and what China is doing now, is requiring foreign companies to move some parts business into their country. They add more parts over time, and try to focus on a few domestically. After 20 or 30 years, they have the technology to build an entire plane. Then they cancel your contracts, your workers lose their jobs, and you start importing their subsidized planes. After some time passes, you lose the technological edge. Maybe it's the fault of corporate managers, but then we should be looking seriously at what's wrong with the managers or corporate structure that it favors a high time preference.

If we can choose between buying Saudi or Venezuelan oil, or spending more to drill shale at home using more expensive technology (back in the day). The free market guy says import it. Where does the capital go? He says it goes to a new industry, but there's no evidence of this, it can also go to Venezuela to invest in their oil production facilities. Meanwhile, most of the oil industry guys aren't going to become computer programmers. If instead the oil is drilled at home, you have an entire supply chain, parts and equipment and oil services, all the way through bank loans and finally the profits sitting in the bank accounts of Americans who reinvest in the domestic economy.

The American economy, along with all the East Asian powerhouses, were built on tariff protection for infant industries that were competing with more technologically advanced economies.

Anonymous map June 23, 2017 12:53 PM  

https://www.barchart.com/stocks/quotes/%24INDU/technical-chart#/technical-chart?plot=LINE&volume=0&data=MO&density=X&pricesOn=1&asPctChange=0&logscale=0&sym=$INDU&grid=1&height=500&studyheight=100&overlay1=FFY00&axis1&axis2=false&axis3=false&isComparison=1

Look at the leading indicator of the fed funds rate being raised and tanking the market.

Anonymous map June 23, 2017 12:57 PM  

Roundtine,

"The point isn't to pick winners and losers, but add some protection such as a flat tariff. Paul Ryan's border adjustment tax is a version of this. It will cost more to buy imported goods under his bill, and it would be cheaper to export."

Imports will not be more expensive. Firms are profit maximizing. Price are already at their highest without affecting demand. Therefore, tariffs will be eaten by the company. If companies could charge you 20% more, then they would do already.

Offshore outsourcing was not practiced to pass any savings onto you.

Anonymous Roundtine June 23, 2017 1:07 PM  

Our credit markets are completely controlled by the Federal Reserve

The slowdown in housing began in 2005 when the funds rate was only 3%.

Anonymous Roundtine June 23, 2017 1:15 PM  

They can't charge 20% more because they have competitors who undercut them. If the government raises all their costs by 10% simultaneously, the price will rise by some amount. Maybe Wal-Mart has domestic suppliers that charge 1% more than the foreign supplier. Then prices will rise by 1% as they switch to the new lowest cost supplier. The main impact will happen through the currency, some of the higher tax will be offset by a rising dollar.

Anonymous map June 23, 2017 2:12 PM  

Roundtine,

"They can't charge 20% more because they have competitors who undercut them. If the government raises all their costs by 10% simultaneously, the price will rise by some amount."

Consumers don't care what a company's costs are. If they do not want to pay what companies are charging, then they won't pay. All companies face downward sloping demand curves resulting in increases in prices affecting willingness to buy. Consequently, businesses cannot pass all of their costs onto consumers. Pricing, is, therefore, always optimized.

You are already paying the highest possible prices.

Anonymous map June 23, 2017 2:14 PM  

Roundtine,

I am not talking about the slowdown in housing. I'm talking about the market collapse.

Anonymous map June 23, 2017 2:18 PM  

Roundtine,

The constant refrain that tariffs are going to result in everything becoming more expensive is a lie. That is the point. You can tell it is a lie by how often companies keep bringing up how they would have to raise prices and harm consumers. If they could do that, then why would they care if tariffs force prices higher? They wouldn't. Their constant squawking about passing on costs hides the fact that they know they cannot pass on costs, resulting in their margins being affected.

The cost of tariffs will be largely borne by the importers themselves.

Blogger praetorian June 23, 2017 2:45 PM  

Given that this was a freebee will it be posted somewhere?

Blogger Tatooine Sharpshooters' Club June 23, 2017 4:22 PM  

Paul Samuelson is one of academia's Great Gammas, trying to turn economics into physics out of envy and believing, as all the chummy academics do, that Marxism can work, right up until it doesn't.

Blogger Daniel F June 23, 2017 5:12 PM  

Depressions are caused when Unpayable Debts are cancelled en masse. There are 3 ways to cancel Unpayable Debts en masse. The first 2 are painful. Hyperinflation make your debt look small. Example, 1923 Germany. Cancel Unpayable Debts through home and farm foreclosures and bankruptcy court as in USA 1933. 3 million Americans starved to death in the 1930s. Best way is by government Debt Cancellation. The kings of ancient Sumer and then Babylon starting 4,400 years ago cancelled debts en masse painlessly. We could do the same here if we arrested the Bankers who stole $50 trillion from us according to Catherine Austin Fitts. We could use that money to pay off bad debts and start over again with a non-interest bearing currency like Lincoln's Greenbacks.
Try This: Debt Cancellation Is The Best Way To Take Down Bilderberg
https://vidrebel.wordpress.com/2015/04/07/debt-cancellation-is-the-best-way-to-take-down-bilderberg/

Blogger Snidely Whiplash June 23, 2017 5:23 PM  

Price are already at their highest without affecting demand. Therefore, tariffs will be eaten by the company. If companies could charge you 20% more, then they would do already.
This is only partially true. Part of the reason they can't charge more is price pressure from competitors. Those competitors will also have their base cost increased and will not be able to undercut as much.
The net, and intended, effect of a tariff is higher prices, which reduces price pressure, allowing domestic producers to compete on an even basis with foreign producers. This is the mechanism by which tariffs work. You can't maintain both that they work and that they don't increase prices.
The increase does not, however, equal the tariff rate or anthing even close.

Anonymous David June 23, 2017 5:24 PM  

"You can tell it is a lie by how often companies keep bringing up how they would have to raise prices and harm consumers."

got a chuckle out of that. Since we're looking at the big picture, do you think a nation could be harmed by 'isolation' of protectionism et cetera? can the usa internally produce the right goods and technology internally (and externally with the penalties of importing included)? Plus the horse may be already out of the barn considering nations seem to be so eroded these days.

Anonymous map June 23, 2017 6:58 PM  

Snidely,

"This is only partially true. Part of the reason they can't charge more is price pressure from competitors. Those competitors will also have their base cost increased and will not be able to undercut as much."

This is not correct. An industry as a whole faces a downward sloping demand curve. This means that the entire industry's customer base is sensitive to price changes. The cause of the price changes is not relevant to customers. If the cost basis of the industry goes up and prices are maximized to the point where price increases result in lower revenue, then the firms will eat the cost to protect their revenue. If margins grow slim enough, then that will induce the company to move production back to the US.

The tariff will not magically get new competitors to enter the market. They will force existing companies to re-locate back to the states.

Anonymous Roundtine June 23, 2017 8:07 PM  

Map,

There are real world examples of tariffs driving up prices such as sugar in the US.

Blogger Snidely Whiplash June 23, 2017 9:07 PM  

map wrote:If the cost basis of the industry goes up and prices are maximized to the point where price increases result in lower revenue, then the firms will eat the cost to protect their revenue. If margins grow slim enough, then that will induce the company to move production back to the US.

They can only eat profits. It's possible to run at a loss, but not for very long. Sure, if they have a 30% margin and a 5% tariff, they'll eat almost all of that. If they have a 10% margin and a 50% tariff, they simply cannot eat it. It cannot be done. If they try, some will go out of business, reducing the competition, and reducing price pressure, resulting in higher prices.

Blogger wreckage June 25, 2017 11:19 AM  

OK. This is interesting.

Of course, there might be differences in a small, export-oriented nation's experience of tariffs, and a large, complex economy like the USA. Among other things, the AUD is much more volatile; the penalties for a rising dollar are more severe, and there's less internal trade to benefit from barriers.

It seems that there's a lot of political capital aimed squarely at stopping domestic industry from competing. Domestic companies generally have better skills, better access to the market, and better technology. This should offset lower wage bases, but largely it doesn't.

I think Vox's allusion to a multinational wealthy class that has begun to suit trade deals to itself rather than to nations is possibly explanatory.

Blogger wreckage June 25, 2017 11:19 AM  

In other words, map, at the micro level, micro works.

Blogger Dwain Dibley June 25, 2017 6:29 PM  

If you start your analysis in the wrong place then, no matter how right you are from that point on, you're going to be wrong in the end. That's Steve Keen's monetary analysis. And it's not just Steve Keen, it's also the Austrians, the Keynesians, the Monetarists, all start their analysis with the same false assumption, that banks and the Federal Reserve create money when there is nothing in fact or law that supports that notion.

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