Tuesday, August 3, 2010
I have been absent from the blogosphere for 6 months. After the 4 horsemen galloped up to my log cabin last winter and announced that Armageddon had finally arrived, I felt there was really no reason to continue with a life of trivial self delusion. It was game. Set. Match. What am I referring to? Well the US Supreme Court deciding that corporations had the same rights as individuals. Of course that has been the de facto law of the land for decades but when Shrub's court made it the echte law of the kingdom, I knew the war was lost. So I gave up and put my dog and pony show in the barn. Since then the economy has continued its ride down the ABS drain pipes heading for the septic tank, BP has despoiled an already despoiled Gulf Coast, and Wyoming finally got some snowpack well into spring. Why bother blogging? I only blog when something knocks me up the side of my face. Well it finally happened. I snapped out of my reverie. Kartik Athreya came into my life. I owe old Kartik a debt of gratitude. You may politely have asked "Who the he__ is Kartik Atheyra?" That guy up left is Kartik, He works as a senior economist for the Richmond Federal Reserve Bank.And lest you think Kartik is not a heavy hitter, he graduated from the University of Iowa. That should shut you up. He wrote a paper entitled "economics is hard" on June 17th in which he basically said that non economists(ie bloggers and other low unqualified yammering nabobs) have no business criticizing economic high priests in the temple. Here is a sample of his thesis:"writers who have not taken a year of PhD coursework in a decent economics department cannot meaningfully advance the discussion on economic policy." Here is a link to his paper:http://www.scribd.com/doc/33654737/Economics-is-Hard#fullscreen:on
Kartik also trashed one of my demigods, Elizabeth Warren, which really got my ruff up. And so I am trashing Kartik and all the other anosognosiacs working at the Richmond Fed, The New York Fed, the Pocatello Fed, and for that matter all the feds everywhere. Anosognosia as you may know if you went to a decent medical school is when a disabled person is unaware of his disability. It is common after strokes and with certain other psychiatric disorders such as Alzheimers Dementia.... "I'm not crazy! Whatza matter with youse guys?!" The Feral Reserve both in the US and in Central Banks everywhere is full of economists suffering from anasognosia. Greenspan had it. Summers has it. Geithner has it and Bernanke has it in spades. They simply are unaware that they are disabled, prisoners of economic dementia, practitioners of cognitive dissonance. The problem is we are the puppets and they hold the strings. They are economists of a particularly virulent variety, neo classical, Keynesian economics. These clowns are the most dangerous sort of clowns, clowns who don't know that they don't know. They are so stupid that they actually think that economics is a science! They pretend it is a science. The fact is that economics is no more a science than psychology or sociology or religion is a science. The simple fact is that unlike a true science, economics has no verifiable, replicable way to prove anything. Economists can look at money and credit flows, capital flows, labor management interactions, interest rates, trade and tariff interactions going back centuries and then show no diffidence drawing conclusions about causality. In the late 20th century the neoclassical school started to draw upon mathematical tools, a shrewd decision, because unlike economics, mathematics relies upon demonstrable, replicable theorems and models and explaining economics with mathematical concepts would validify economics. But shit is still shit even if you put it into an obfuscating equation. Since there is no way to prove conclusively a particular economic law or theorem, the field has been balkanized into many schools, each with their own particular bias. I feel confident that there are indeed economic laws which govern economic and financial interactions among us but the sad fact is with few exceptions, there is no reliable way to prove that the Austrian school is superior to the Chicago school any more than you can prove that a Presbyterians view of creation superior to an Anabaptist.
The tragedy, and make no mistake, it is a colossal tragedy that the Feral Reserve and the giant bank holding companies have colluded and conspired to trade garbage with the financial dimwits of the world with no oversight using access to Trillions of dollars issued from the public treasury at 0 % interest. And suprise surprise! The 6 biggest banks have actually made money this year even though the other 900 or so other sizable banks have not. The sad fact as anyone who attended a decent community college know that the FASFA accounting rules were secretly and suddenly changed a few years back to conceal the fact that many of these banks were insolvent. And so we lurch along, extending terms and pretending that the turbine engine driving this chimerical economy which flamed out a few years back can be reignited and we can start borrowing and consuming our way back to prosperity. The chance of that happening is zero. The large corporations have rigged the tax system to defer taxes on their overseas profits, allowed deductions on all costs to move a business overseas and continue to practice domestic job killing wage arbitrage. The US now makes almost nothing of value beyond some good heavy equipment, armaments and airplanes. Of course we have a booming service industry where we all take in each other's laundry and an utterly corrupt medical industry which contributes 2.5 Trillion to our GDP. Banks trade paper aided by accountants and lawyers. Some insurance companies even insure this paper even if they do not understand it or have the reserves to back losses . But who actually makes anything of real value in a financial and service based economy? The game is over Fido. Our economists who do not understand the pernicious danger of debt and cheap credit, confuse money with value and are blissfully unaware of the dominant role that fossil energy has played in our industrial expansion and remain unaware of the consequences to that industrial economy when that fossil energy is withdrawn in the near future.