Eating Your Heart Out

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Besides coughing our lungs up, Americans have been letting envy and greed eat our heart out since March as we’ve watched the rich get richer, even as very little work or spending is being done across the land. There is a reason for this anti-gravity act. Following is a recap of the vampire octupus Trumpvirus has made of the Federal Reserve, which is supposed (by its charter) to be the heart that pumps the blood-money through the struggling, inflamed veins of the body politic:

“On Friday, President Donald Trump announced he will be nominating Stephen Moore to the Federal Reserve Board of Governors, sparking an outcry from economists who consider him overtly partisan and unqualified for the role. And according to Bloomberg News, Moore hardly pushed back on the notion that he was unsuited to govern one of the most powerful economic institutions in the United States: “I’m kind of new to this game, frankly, so I’m going to be on a steep learning curve myself about how the Fed operates, how the Federal Reserve makes its decisions,” Moore, 59, said on BTV. “It’s hard for me to say even what my role will be there, assuming I get confirmed.” He also tweeted on Friday, thanking Trump “for the opportunity to serve & for your zealous commitment to freeing the American economic engine from government overreach & oppressive taxation!” Moore’s admission that he will have to learn as he goes how the Fed works is not confidence-inspiring. Nor is his apparent belief that he could use his position at the Fed to “free” the economy from “oppressive taxation” — the Fed doesn’t control tax rates, it controls interest rates, and it technically doesn’t even directly do that. Indeed, Moore does not have the typical qualifications of a Fed appointee, the vast majority of whom have a PhD in economics. Moore has a Master of Arts degree from the famously right-wing George Mason University and served as a fellow at the also famously right-wing Heritage Foundation. He has advised several GOP campaigns, including Trump’s, and co-wrote a book with conservative economist Art Laffer titled “Trumponomics: Inside the America First Plan to Revive Our Economy.” Moore is a proponent of supply-side economics, the theory that tax breaks for billionaires and corporations will increase investment and production to the point that prices fall for everyone else — which has broadly failed but nonetheless forms the backbone of the Republican Party’s economic agenda. As a pundit, he has made some spectacularly wrong predictions, like that the U.S. was risking hyperinflation during the Obama years and that ACA was increasing the deficit. His errors have had human consequences: he helped craft former Kansas Gov. Sam Brownback’s tax cut plan, which essentially wrecked the state.”

— Matthew Chapman, Alternet.org, March 25, 2020

Now jump to the future, like Sybill the Soothsayer. It’s June: Here’s one of our most trustworthy and far-seeing economists, Michael Hudson:

Michael Hudson: “There is only one reason for a stock or bond prices to go up. And that’s because of the flow of funds into the stock market. What had been supporting the stock market for the last 12 years was very largely stock buybacks by companies using their revenue to sort of close down their business, disinvest and buy their own stocks to at least keep the prices up. Well, what’s flowing into the market right now? Obviously, it’s not corporate profits buying their own stocks, and it’s certainly not popular money coming into the market by small investors thinking that stocks are going to earn more. All this money is coming into the market from the 10 trillion dollar bailout via the Federal Reserve. The Federal Reserve is going out directly and is buying stocks, bonds, junk bonds, mortgages, junk mortgages, all to prop up the value of assets. Now, when it’s putting this money into the stock market, it’s buying stocks that are already issued and have long since —the proceeds have been spent on building factories or enterprises or as means of making money. So none of this bailout money, none of this 10 trillion going into the stock market has any effect at all on the real economy of production and consumption. It’s solely to support the assets that are held almost eighty five percent by the wealthiest 10 percent of the economy. So the Fed has revived the stock market downturn. It’s come up, and what it said is, ‘Folks, you can bail out of the stock market, give us your junk bonds.’ That’s sort of like the Statue of Liberty for wealthy people. Give us your stocks. Sell your bonds. We’ll buy them all up at Federal Reserve expense and will purchase them. And we’ll also do our own forward buying to manipulate the stock market by promising to buy our stock, so the higher price in the forward market. So that’s going to create a speculative demand for stock. So the speculative demand for stocks by Federal Reserve manipulation and the actual flow of funding money into the stock market from the government has been pushing it back up, giving the illusion of prosperity, at least for the 10 percent.”

Paul Jay: “But are they actually straightforwardly buying stocks to they’re buying corporate debt, which allows them to go buy their own stocks and also just making so much money, so cheap people can buy stock? But is the Fed actually straightforwardly buying stock?“

Michael Hudson “That’s what it said it’s been doing.”

— Michael Hudson in conversation with Paul Jay, June 2 2020, on nakedcapitalism.com

Now, it’s August: the stock market has puffed itself up like a Salzburger knorckerl. Apple is worth 2 trillion dollars, dollars which didn’t even exist yesterday! Shouldn’t we all be glad prosperity is here to stay, even when there is no economic activity on the horizon? Is there any economic force, asks the View, that could ever collapse such a light and perfectly-baked souffle? Sybill, should we all just succumb to affluenza?

Sybill the Soothsayer: You idiot! On November 4th, the day after Joe Biden is elected, that ignoramus Moore could get a call from Donald Trump, and bring the whole world economy to its knees, with a single barked command into his office intercom: “Sell.”

Monopoly — The Fed Finally Sees The Cat

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www.nakedcapitalism.com

“Do You See The Cat?” A Georgist political badge
from the 1890’s.

What cat? Where? What are you talking about?
I don’t see any cat.

“American policymakers are giving more and more credence to the role of monopoly concentration in the economic restructuring that started in 1980, in the Reagan/Thatcher era, that shifted power and rewards from labor to capital. Importantly, these experts don’t just see monopoly as a problem; even basic economic courses show in toy models that they increase prices and decrease output. They also acknowledge that stagnant wages, rising profit share of GDP and escalating wealth concentration are bad outcomes economically and societally. A new paper by Fed economists Isabel Cair ́o and Jae Sim describes how they developed a model to simulate the impact of companies’ rising market power, in conjunction with the assumption that the owners of capital liked to hold financial assets (here, bonds) as a sign of social status. They wanted to see it it would explain six developments over the last forty years, and it did!
— Real wage growth stagnating and lagging productivity growth
— Pre-tax corporate profits rising rapidly relative to GDP
— Increasing income inequality
— Increasing wealth inequality
— Higher household leverage
— Increased financial instability“

— Yves Smith, Naked Capitalism blog, August 19, 2020

Hello, Kitty….

“The history of Monopoly can be traced back to 1903, when American anti-monopolist Lizzie Magie created a game which she hoped would explain the single tax theory of Henry George. It was intended as an educational tool to illustrate the negative aspects of concentrating land in private monopolies. She took out a patent in 1904. Her game, The Landlord’s Game, was self-published, beginning in 1906.

— Thus Quoth Wikipedia

Remember Henry George? The Philly boy who took ship and made good?

Monopoly, whether the board game, or the social suffocation, is death: the final squeeze of the octupus. But it is merely the end-point of the long squeeze, which is our morbid, irresponsible and socially destructive 40-year drive to concentrate wealth and poverty, back to the Gilded Age point that society is driven to extremis, which, folks, is where we are now.

During my lifetime, the wise precautions and regulations of the preceding 150 years of Progressivism, The New Deal, and The Great Society, have been thrown down, to re-admit the insidious octopus of Monopoly back into “our economy.” The drive towards monopoly is a feature, not a bug, of our current real estate laws, our tax laws, and our corporate governance. Ronald Reagan, George H.W.Bush, Bill Clinton, Bush/Cheney, Barack Obama, and Donald Trump, each and every one, spent their time in the White House mostly in slippers at the back door, calling “Here, kitty, kitty….here, kitty kitty, kitty kitty….”

The Federal Reserve, as an institution, is full of wise people like those who wrote this report, but since the days of Alan Greenspan, it has been run by what can only be described as crazy right-wing voodoo grifter zealots. Have you caught the news that the Federal Reserve is now investing in the stock market? It’s true. This news sounds anodyne, but let me re-phrase it in terms that drive home what a destructive crime against humanity this innovation is: the king’s ministers are dumping poison into the city water supply, in order to kill everybody and seize their wealth. If Americans heard this message, would they rise up against the Fed? Oh…Flint. Forget it.

See the cat! Feel the Bern! I mean — er,……Vote for Biden.

Freethought / Freehand

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I’ve culled some excerpts from an article by Paulgibbons1 at www.retakedemocracy.org. This article excerpts from another article, by Kurt Anderson, in The Atlantic. The result is a bunch of clunky cutting and pasting, which is time-consuming for me and confusing for Patient Reader. I regret I can’t just link to the articles directly, but Google has recently (unilaterally and without any comment by anybody) made it impossible for one blogger to link to another blog, on WordPress. At a single keystroke, they have effected a corporatist coup that fragments the people, by fragmenting the Web. This is exacerbated by the Atlantic’s recent decision to put its content behind a paywall, like all the other media corporations cloaking themselves in the gravy-stained dignity of the robes of the old 4th Estate.

Sadly, the open, free, peer-to-peer, lightning-fast, penny-cheap, trade it and save it value of the Internet is almost destroyed. They’ve tried to turn infinite Cyberspace into Boardwalk/Park Place real estate in the name of “private intellectual property,” which, let’s remember, is a legal fiction and a thing that doesn’t exist. And if private intellectual property did exist, it would doom the bottom 9 billion of us in the human race to total annihilation in a single generation. If ideas aren’t free, if they compete in cost with food, if it takes going into debt to be an educated voter, can you doubt that society will remain ignorant? It’s too late to hope we will ever get to vote on access to the Web. But next time you get a chance to express any kind of a preference about anything, please speak up FOR net neurtality and AGAINST the bigoted, fascistic destruction of the Alexandrian Library — er, the enclosure of the Internet.

And for Uplift!: some cartoons taking the View that rolling around giddy and cackling in a huge pile of gold coins in a private underground vault, soundproofed against the cries of the homeless outside the moat, is not social; nor is it respectable; nor is it holy; nor is it healthy; nor is it American.

From The Slide Into Neoliberalism, by Paul Gibbons: “This line of thinking [when Democrats turned against the New Deal] was only a small step from the neoliberalist ideology forming in the 70s and 80s, where “liberal” Democrats were more than willing to entertain corporate and conservative ideas (corporate tax cuts, deregulation, welfare “reform”). But while liberals were willing to compromise, the newly energized right had but one objective: make the rich richer and corporations unfettered by regulation.

Starting in the 1970s, the Milton Friedman Doctrine, the righteous pursuit of maximum profit to the exclusion of absolutely everything else, freed and encouraged businesspeople and the rich to be rapacious and amoral without shame. Indeed, the new economic right even encouraged them to wage a class war—explicitly against (traitorous white) liberal professionals and the (black) “underclass,” more discreetly against the (white) working class they were enlisting as political allies.”

From The Atlantic: “College-Educated Professionals Are Capitalism’s Useful Idiots: How I got co-opted into helping the rich prevail at the expense of everybody else”

And so, four decades of unrelenting assault on unions, working families and the poor unfolded.The liberal response was not to take to the streets with the working class, but to try to negotiate the best deal possible with conservatives who were far more principled and less willing to yield. And so “the Rust Belt” became a common term, indicating the demise of manufacturing and along with it the jobs that had supported the working class. But “rust” does not just surface from nowhere, it is a sign of neglect and poor stewardship. The Democrat “response” to the erosion of working class was Bill Clinton and NAFTA, followed by Obama’s totally caving to Wall St and the banking industry. The Party had exchanged practicality for principle and while it was able to make deals with the right, in doing so, it moved further and further from its principles and in so doing lost the support of many blue collar working people.

The faction that was now dominant in the Democratic Party had been pushing for a more centrist economic and social-welfare policy since the 1970s, but the Republican Party after 1980 had no comparable moderating faction—which in a two-party system meant that Democrats kept moving toward a center that kept moving to the right.”

From The Atlantic: “College-Educated Professionals Are Capitalism’s Useful Idiots: How I got co-opted into helping the rich prevail at the expense of everybody else”

This is when Arthur Laffler, the founder of supply side economics was embraced not just by Reagan and the Koch brothers, but by the likes of Democratic presidential candidates Jerry Brown (1992) and Gary Hart (1988). Neoliberalism and market-based solutions were at the heart of the Democratic Leadership Council, founded by Bill Clinton in 1985. Anderson reports that Laffler himself claimed to have voted for Bill Clinton.

The slope from FDR to Bill Clinton was indeed slippery, steep and insidious. Indeed, since JFK it would be hard to find any serious leftist candidate until the rise of Bernie Sanders. What’s more, until Sanders no viable economic justice platform was ever developed to counter the New Democrat socially liberally, fiscally conservative mantra. With the Dow booming, any critic of rapacious capitalism was deemed fringe, if not lunacy.”

Chillin’ with Norah and Ito

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It’s 103 downtown today. A light sea breeze before noon helped Valley Village back off that high, to a reasonable 96; though that sea breeze also upped the humidity here, which made it seem like 103. And anyway, as I say, in the Valley, it isn’t the heat, it’s the stupidity. (Drivers in this weather are prone to Valley Fever, that vexing fugue state which afflicts already anomic Angelenos at every traffic light. In Valley Fever, motion of any kind, even to flex the foot onto the accelerator when the light turns green, is a seemingly impossible task. Most discouraging.)

To avoid all this, and coronavirus too, I play indoors with the cats, with the air conditioning blasting. It’s uncomfortable, but to turn it off for even a moment in this weather would be fatal. The cold makes Norah appreciate the blanket.

For me, the chill air directly on the skin, especially on the side sitting close to the compressor, makes my neck stiff, and my throat tingle menacingly. Thus, the kimono. It’s happy luck that the robe matches the cool markings of my chill buddy Ito.