KK3 and the Fullwiler flourish

  By Mystic | April 2, 2012 - 11:53 | ,

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Scott Fullwiler’s article at `New Economic Perspectives`.
Same article at `Naked Capitalism` (but with more comments).

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Written by: Mystic on April 2, 2012.
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  • snedmeister1

    I’m hoping Scott has a strategy here…

    As in, back Keen on the banking issue, then move onto MMT/R….
    Establishing his authority in this banking field now, will give him enormous presence when discussing MMT/R, in future debates….

    Get out into the spotlight, catch some “air” time, claim some high profile victims……
    And drive the point home……

    ( Evening all…!!! )

    • http://overthepeak.com/wordpress/ Mystic

       I am thinking that it has to be banking that breaks the economists enough to let MMR through…..(not the other way round).

      • Paul

        Economics is a very, very soft science.  Think Sociology. 
        Shine the light of Calculus on their bullshit, Neoclassical models.  Krugman and his lot will scurry like cockroaches back into the dark crevasses of academic masturbation!  They may be worshiped by 19 year old students and semi-retarded politicians, but they will excoriated by the sharp minds of productive capitalism.  They will be sent packing, if Keen can keep his message cogent and focused.

  • Anonymous

    Just wanted to say that I have been really enjoying the Keen-Krugman presentations.  I have been watching Keen lectures now trying to get a better understanding of where he is coming from.  I had never heard of him before you mentioned his name.  

    • http://overthepeak.com/wordpress/ Mystic

      Hello Flig,  How yaaa~~~~~doin’~!?
      Keen ain’t gonna do you any good in Detroit, but he may shake the economic profession up enough to let in some real light.   

    • Paul

      Flig, get out of Detroit asap.  It’s Chernobyl, socially and economically.  It’s never coming back.

  • Anonymous

    Dear Mr. Mystic:

    Your first link appears to be broken.  Second one works fine.

    • http://overthepeak.com/wordpress/ Mystic

       Thanks for trying the link John.
      (do you know what is what with this banking stuff yet~!?)

      • Anonymous

        In a word – No.  And because there is such disparity of opinion amongst the credentialed “experts”, my lack of comprehension is unabashed!  But I am following along, and trying to understand what is “real”!!
         
        It is encouraging (and refreshing) to see the discussion “move off the plantation”.  What I will say, with a high degree of confidence, is that 90% of the “experts” don’t have a clue, because (in my opinion) they are in a big loop when it comes to the “money” issue. 
         
        I hope the “Keen Camp” can gain some traction in the “big discussion”.  I think he has a much more realistic grasp of the debt problem than any (most) of the mainstream guys I’ve heard and read.  Some of his proposals are shocking!  But he really seems to “get” the scope of the debt problem. 

  • Bigcollapso

    One mans debt is another mans “wealth”, and that “wealth” is monumentally, historically high. Even if it can’t be turned into “real wealth” it still represents political power because everyone else is in debt them. Follow the numbers and follow the power.

  • eastex

    O.K. you finally pulled me into this thing with that wonderful article.

    So, I have a question. The bank can loan me money for a house, then fix their books by borrowing money from the fed afterwards. This leads me to pay someone to build my new house. If that person was previously unemployed, would his new job (building my house) not allow him to borrow money from a bank? I guess what I am wondering is, isn’t the public’s desire to take on more loans, directly affecting the unemployment rate? I will not go on, because it starts sounding like a circle.

    • snedmeister1

      Hello ET…:)

      I hope you don’t mind me answering, but you are wondering correctly….
      ( Not sure if “fix” the books is quite the phrase though )…

      But essentially, yes, if enough people don’t take on new debt, the economy stalls….
      If the public sector don’t then do their thing to balance things, the economy recedes…..

      Problem is, the people can’t borrow any more, so that leaves the Gov’t….. To do their thing…!!!
      Until such a time as people can both afford, and feel comfortable, to do their thing…..!!! :)

      ( If you follow me…???!! :) )

      Don’t stop yourself now…. It is a circle…!!!

    • http://overthepeak.com/wordpress/ Mystic

      Just a note on – “The bank can loan me money for a house, then fix their books by borrowing money from the fed afterwards”…………This is in the wildly, wildly unlikely event that they need to (borrow extra money)……..Even if it was a loan to Apple to build a new factory, the loan is noted on the bank’s asset side and the deposit is noted on the bank’s liability side (then Apple spends all the money the same day), there is still no direct reason that this causes the bank to have to borrow from the Fed (or other bank). 

      Here I’ll put a note to Sned (because he won’t be far away).
      The loan goes on the asset side – the `money` is put on the liability side.
      The `money` is paid out, leaving only the asset; but at the CB the bank’s reserves will be taken down by the amount of the `money` paid out and credited to whichever bank (via some builder or other) it was paid in to.  The bank is now up one asset and down that amount of reserves.
      Now we come to the clever bit – Taking the banking system as a whole, it is very likely that `our bank` will receive a deposit about the size as the reserves it lost.  So, the deposit is made……The bank registers a new liability and also the CB marks up its reserves by the amount of the deposit.
      (We are now back to all square – Asset registered, Liability registered and Reserves registered….all nicely balanced).

      • snedmeister1

        I am never far away…:)
        Unless I’m working my knackers off, for a piece of the good life….!!!

        Put the motorbike in the garage this afternoon for the accident damage…. 
        Bloke did that thing that plumbers do…. “oooo, might be coslty, mate…!!

        Yes, I kid you not, he had the cheek to call me mate, while contemplating how much he thinks I have my pocket…!!!

  • snedmeister1

    I notice on Debtwatch, there is more Ding, Ding..!!!

    • http://overthepeak.com/wordpress/ Mystic

      There is even more more…..Krugman has done another NYT article (number 5 I think) and has blown it one more time (read comments) on, this time, central banking~!
      http://krugman.blogs.nytimes.com/2012/04/02/a-teachable-money-moment/

      • snedmeister1

        I was just about to read that one, until the Apple “pinged” to notify me of a message…!!! :)

      • Paul

        The cockroach is scurrying:  “The Fed controls the money.”  He’s toast. 
        It’s like watching the Wizard of Oz when Dorothy (Keen) throws water (dynamic modeling) on the Wicked Witch (Krugman) and the old bitch dissolves into a pile of goo.

        • http://overthepeak.com/wordpress/ Mystic

           Yes, but now silly people will go on with, `everything Krugman says is crap`…….which will never be true.

          • Paul

            It’s the presentation that counts.  Krugman looks like a silly boy.  Keen looks like a smug bastard.  Krugman is going for the sympathy vote:he’ll get it.  Keen should blame himself with all that global warming and debt jubilee crap.  He had the right message, but he is not disciplined enough to convey that message.
            The politicians and the proletariat will not be moved, in any way, shape or form.
            It’s the same old, same old. Rich fuckers win again.  What a silly world we live in.
            Now, bring out the Dobermans to attack the poor and hungry.  I’m bored.  And I paid my taxes, damn it!

            • http://overthepeak.com/wordpress/ Mystic

              I’m glad I didn’t pay taxes……Not so much because I retained the money, but because I never got to use the horrible – “I pay my taxes, goddamit~!!”. 

              • Paul

                I hope you realize that I was being facetious.

                • http://overthepeak.com/wordpress/ Mystic

                   The `I pay my taxes`…..yes.
                  Too horrible~!

                  • Paul

                    Aye.

  • joebhed

    Krugman :  I know you are, but what am I?
    Keen :  I know you are but what am I?
    MY model is better than YOUR model.

    No, MY model is better than your model.

    YOUR model feigns EQUILIBRIUM, and IMPLIES the money-multiplier.
    MINE is dynamic; debt-creation is almost organic.

    What national economy?
    What money system?
    Who cares about the debt?

    peepeedickin.

    • http://overthepeak.com/wordpress/ Mystic

       Yes Joe, but this is (could be) the way in…….
      `Money creation` has been in the NYT five times in one week~!

      • Sam

        Agree – unwittingly Paul Krugman has opened the door for a proper academic debate on the role of money in economies. I was actually stunned to learn that macro economic models can ignore the banking sector (that was news to me!).

        I hate when egos get in the way of trying to understand WTF is going on, but in this case it has been helpful for PK to err so publicly and with such vested ego.  Thanks Paul!

        • http://overthepeak.com/wordpress/ Mystic

           Aye…….now camel’s eyes looking in on bare economist bottom~!

  • Guest

    Banking is like many other industries – it’s setup and run for the benefits of the insiders.The last thing you want as an insider is for everybody to know exactly what you’re up to – especially politicians and academics who might try and interfere with your scheme. So, as an insider, you create and foster the public perception that what you’re doing is fair and for the benefit of the public and you obscure the true nature of what you’re doing. (capitalism anybody?) There’s no benefit to the bankers if people like Krugman are telling the politicians the truth – it’s actually a bonus if a Nobel Laureate is helping to propagate the mis-preception of how your system really works. If you’re a banker, you want the academics and politicians chasing their own tales and believing the system is fair – even if they think it’s not working perfectly. What’s disappointing is not that people like Krugman can get it all so wrong, it’s that amongst those who get it right and see through the smoke and mirrors, there’s still the perception that the system is broken because they’ve bought in to the ideas about fairness and public interest the bankers were selling. The banking system is setup for the benefit of the bankers. When the system stops benefiting he bankers that’s when the system is broken. I believe you are misguided if you believe otherwise.

    • http://overthepeak.com/wordpress/ Mystic

      Very `Adam Smith` all that.
      Next you will be telling us, that Tesco, is set up, for the good of Tesco~!?

      • Guest

        It was very late when I wrote that. So I’d like to clarify one minor nuance about my opinion on this that perhaps wasn’t clear:

        If somebody can see how the banking system really works and says to themselves (and to others), “it’s working in favour of the banks – I don’t like that, I think there could be a better system and would like to propose a different system”, I can respect that. If they say “it’s a broken system that’s not fulfilling it’s obligation to the people and something needs to be done about it!”, I’m not down with those people, because to me, their position suggests they don’t understand the nature of the current system even if they know how it works. There’s a slight, but important difference in my mind. Does that make sense? Possibly not, I guess. 

        • http://overthepeak.com/wordpress/ Mystic

          I am stroking my beard and going in for a second read…..

          OK….Down with everything ignorant people say about most things…….Fairy snuff~!

          I am moving towards a video from the first position. 
          It is hard to explain in a comment (for me anyway)

          It is something like – The system is how it is and bankers make the best of what the system is.
          Either, the whole system needs changing, or incentives must be put in place whereby the bankers will win out if they do `good things`.
          (the problem arises in choosing what those `good things` should be).  

          • Paul

            Commercial banks could just go back to being “glorified utilities”.  Clinton repealed Glass-Steagall; the separation of commercial and investment banking was gone.  Greenspan kept the interest rates too low for too long, creating an environment where commercial banks began behaving like hedge funds.
            Wouldn’t it be best to return to the days of boring commercial banks on one side and high risk investment banking on the other side?  Most consumers do not need a hedge fund bank. 

            • http://overthepeak.com/wordpress/ Mystic

              I think it is time to go for deeper surgery………but it won’t happen…..this time~!

              • Paul

                Who is gong to perform that surgery?  The politicians?  I don’t think so.  They are owned by the banks and corporations though their lobbying firms, policy think tanks and PAC’s.  We can’t even get campaign finance reform, after discussing the issue for decades.
                Will the Keen Camp expose the flaws inherent in the situation?  Maybe, but only if that Minsky program is dead on.  We’ll have to wait and see if the software matches the theory.  By “this time”, I assume you mean that we will have to wait for another major crash before people start asking for a new system? 

                • http://overthepeak.com/wordpress/ Mystic

                   I don’t hope for anything from `Minsky`.

                  Politicians are 90% ignorant.
                  But they know when their asses are on the line.
                  Another problem on the money side, and they are not going to be happy bunnies.
                  One more `enquiry`…….
                  and then another…….
                  until, one day they actually start to understand and think for themselves.
                  Then they will be capable of chairing a committee of what to do.

                  Me no delusion, twill take time.

                  • Paul

                    “Then they will be capable of chairing a committee of what to do.”

                    OK, that should make everything work just fine~?!

                    • http://overthepeak.com/wordpress/ Mystic

                       `Committee` was to keep it from sounding serious, but it is serious.

                      The….what was it called…Pecora commission.  You see, he knew what was what.  He knew he could represent common sense in the difference between `legal` and `immoral`.  He knew what he was about.

                      One day there will be people sitting on a `money committee` that will feel that they know `what is` is `what should not be`.

                      (…..maybe….~??)

                    • Paul

                      One can hope.  By the way, one of the outcomes of the Pecora Commission was the passage of the Glass-Steagall Act separating commercial banking from investment banking.  The liberal darling President Bill Clinton repealed that Act.  So much for nobility, eh~?  Legal and immoral are just words, not actions.

                    • http://overthepeak.com/wordpress/ Mystic

                       Exactly, it takes someone `with balls` to know it is all shades of grey (gray) and just thump in some boundary posts where common sense says they should go. 

                    • Paul

                      I just don’t know where we are going to find that person.  Benevolent dictator~?  Perhaps in the Neo-feudalistic world into which we are descending, a noble King will arise~!  Oh wait, I think that was in Tolkien somewhere…

                    • http://overthepeak.com/wordpress/ Mystic

                      I don’t think it is man (one or otherwise) that we need, or will get.
                      It will (may) be an idea.
                      An idea that `doing the right thing, for the right reason` is the right thing to do.
                      Yes, men will do it, but it is always the ideas that drive them.