Thanks for this superb commentary, a salutary riposte to the vacillations of the Starmer/Reeves combo between free market growth and traditional government debt.
I have been betting on a global financial collapse since 2020. That it hasn't yet happened is because of the huge concentration of wealth in the US which has allowed a few plutocrats to 'bump and dump' Bitcoin, sell gold when the other central banks buy it, sustain a wholly unrealistic US stock market boom in a collapsing real economy, amass government and private debt everywhere in the world, etc.
The issue is not what to do, although your suggestions would improve the chances of reducing the impact of Trump's illiterate gamble in a limited and partial way. Now that world war is looking less likely, the question is has Trump lit the blue touchpaper for a sustained implosion based on liquidation of global debt?
The historical numbers are so out of whack that only a serious political and financial collapse in the US including a run on the dollar will get the world economy out of this stalemate manipulated by gilded age concentration of monetary power.
The likeliest scenario is for a central bank or two to figure out how soon to devalue after the crash, like Britain after 1929 and 2008. This is the first truly global debt crisis. Money has become debt everywhere. Hold you hat when the balloon goes up or explodes, as it must.
Thanks John…for these Insightful comments…and yes, there are the financial imbalances and vast quantities of debt; and the threat of war…Trade wars have in the past led to real wars.
Very thought-full as always Ann. If one set out to behave in a way that is pure “degenerative” - in direct violation of all of the patterns and first principles they describe how life/health works - they could not do better than to study Trump.
It has created a digital currency swap platform, mBridge, that has cut trade transaction cost and time by 90% for the 200 countries in the BRI.
When that is established, it will introduce a reserve facility.
The background: on October 9, 2009, after the GFC, PBOC Governor Zhou Xiaochuan announced, "The world needs an international reserve currency that is disconnected from individual nations and able to remain stable in the long run, removing the inherent deficiencies caused by using credit-based national currencies”. But the first step, he said, would be creating the capacity for trading in domestic e-currencies and bypassing intermediate currencies like the dollar.
The PBOC released the e-Yuan in April, 2021. Public servants who elected to be paid in the traceable e-currency were celebrated for their commitment to transparency and the wild rumpus began.
Russia, China and BIS, the Bank for International Settlements, were development partners with Hong Kong as their headquarters. Thailand has been paying UAE for its oil imports in e-baht for two years, and UAE oil exporters get paid in e-dirham. In 3 seconds, for 11¢. BRICS will start using the platform on January 1, I expect.
The reserve currency will probably wait until 2030.
It's a much bigger deal, for it means the end of the dollar's exorbitant privilege and, therefore, the end of the USA as we know it (and my pension!).
Oh Ann, now what do we do? I’d happily move out of New York, pretend to be Canadian, wear my MAGA (Make America Go Away) hat, but looks like our President (and the puppeteers pulling his strings) is making it hell everywhere.
Surrender isn’t an option obviously, as I am watching my friends pulled off the street by ICE (immigration). Neither is using my licensed handgun a viable option. Armed with my friend Ann’s brilliant analysis, I might be able to sway a few in the direction of sanity. And New York is better than , say, Texas, but you may recall we don’t have nationalized healthcare or basic incomes. But we do have a lot of White Christian Nationalists with military style machine guns. So No Pasaran! La lucha continua! and hasta la Victoria siempre but in the meantime…oh to be in England now that April’s there…
I've been embroiled in asylum solidarity here for the last two decades, Elizabeth; so you have my unequivocal empathy and my militant solidarity (we have Border Force who have a similar mentality to ICE). Fortunately, our own dime-store (pound-shop in Brit-speak) blackshirts do not generally have guns. And we usually outnumber them at least 2 to 1 whenever they come to town. But swaying "a few in the direction of sanity" is THE absolutely imperative task; resistance erupts unpredictably: and whenever it does, it has inevitably been the long culmination of all of these innumerable anonymous, malcontented conversations, held in all of the public and private spaces wherever the dispossessed 99% can be found.
All good wishes from a currently sunny England in April time!🌞
If only economists as a group would unite to make a strong case for the public capture of economic rents while simultaneously reducing the taxation of income earned producing goods and providing services, of the depreciated value of capital goods and of commerce. As Henry George persuasively argued in the late 1800s, the benefits of free trade are significantly eroded because of the private appropriation of economic rents. Some years ago, professor Fred Foldvary estimated that economic rents comprise somewhere around one-third of GDP.
University of California professor Mason Gaffney identified in his writings a long list of the sources of economic rents beyond the core rents associated with locations in town and cities or natural resource-laden lands. He included all natural assets with an inelastic supply (e.g., take off and landing slots at airports) and assets limited in supply because of competition-limiting law (e.g., liquor licenses or taxi medallions).
There is very strong corroborating evidence that the failure to capture a significant portion of the economic rent fund, exacerbated by how government does raise revenue, has manifested the long and ongoing decline in the purchasing power of legal tender. Credit fueled speculation in nature is not only a primary cause of inflation but imposes a high level of stress on economic production and exchange that reaches its breaking point on average about every 18 years.
Howard, thanks for your comment. I am not promoting Bitcoin, my point was about the possibility of internet-native transactions between individuals. I was imagining a series of "bitcoins" which would be immune to inflation, and would take the air out of the cost of Bitcoin which is hyped as being something unique. The value of these tokens ought to trade close to zero. Hence, lots of bitcoin-like offerings. Perhaps some transparent SWIFT exchange between groups would be like this, and perhaps that is what you are suggesting. Very best wishes.
I agree with your statement towards the end that "To restore balance to the international trading and financial system requires first increased management of both trade and capital flows. Above all it requires the re-orientation of economies away from the global system and towards boosting the incomes of the 99% in the domestic economy."
In a way this is what Trump is doing for his country albeit in a bombastic way. He obviously has a radical agenda and has a team with people who are used to doing radical things.
You are right on that point Halim…It is true that Trump is responding to heartfelt despair in certain parts of America…only I do not think he is really concerned with their interests. In his long rambling speech on the tariffs last Wednesday - in the middle of which he paused to flog his merch (red caps) - he pulled up a UAW member, who was part of a union delegation in the audience. The man of course praised the president…but went on to say that he had watched as “plant after plant” was closed in his district, with jobs and incomes lost..and was sure the President was going to fix that. His hopes, I fear will be dashed...
Trump is an orthodox merchant of chaos there is no doubt of that. However, confusion and uncertainty is always the momentary reaction to significant change. The problem is we don't recognize the change that needs to be accomplished. Instead of mistaken, wrong headed and ham handed messing with the anomalies of the current paradigm that needs to change you find the key/core applied concept that will resolve the current paradigm's problems. That new paradigm is strategic Monetary Gifting that breaks up the monopoly monetary paradigm for the creation and distribution of new money AKA Debt Only that the private banking system has wielded since the first day of human civilization. Simply initiate a supplemental version of the same accounting process the banks utilize to create all new money (equal debits and credits that sum to zero) with a 50% Discount/Rebate policy at retail sale and everyone's purchasing power is immediately and continuously doubled while chronic erosive inflation is transformed into beneficial price and asset deflation. Of course, even though the above single policy would reduce the rate of increase of private debt by 75%, because "free" market theoretics is a delusional framework for slow motion chaos and instability you'll have to further regulate/bring order out of that lose end by ending the kind of "innovation"/idiocy that brought us 2008, but thats just the reognition that economics is a complex system and we learn by doing as Aristotle said...particularly by learning from mistakes.
With a significant structural trade deficit - ironically thanks to a US-inspired neoliberal ideology - the only way to maintain a positive balance in the non govt sector, or at least minimise the size of the negative balance in the form of dissaving is to substantially increase the fiscal deficit. If we don't learn the lesson from Godley's sectoral balance analysis then our future will be one of a severe debt deflation.
Correct because a deficit is actually what? Thats right a form of monetary gifting, except a government deficit is indirect and not as widely beneficial as a 50% Discount/Rebate at retail sale. Also, unlike a 50% Discount at retail sale a deficit also doesn't terminatedly deal with the fact that due to the fetish of "free" market theoretics commercial agents are free to game and inflate away the purchasing power of that deficit.
The most multilateral of media of exchange would be a Bitcoin-like internet-native medium of exchange accessible to all individuals and any internet-native groups of individuals through the Internet.
This could be Bitcoin itself, or Bitcoin B which would have the characteristics of Bitcoin while bleeding off the speculation. Perhaps China would have the heft to start another Bitcoin- Bitcoin C- and may benefit from doing so-?
Nonsense. Stop trying to use a crisis to pump and dump your Bitcoin holdings. A far better way is China's digital currency alternative to SWIFT which processes transactions substantially quicker than SWIFT and is likely to hasten dedollarisation within Global South trading.
Thanks for this superb commentary, a salutary riposte to the vacillations of the Starmer/Reeves combo between free market growth and traditional government debt.
I have been betting on a global financial collapse since 2020. That it hasn't yet happened is because of the huge concentration of wealth in the US which has allowed a few plutocrats to 'bump and dump' Bitcoin, sell gold when the other central banks buy it, sustain a wholly unrealistic US stock market boom in a collapsing real economy, amass government and private debt everywhere in the world, etc.
The issue is not what to do, although your suggestions would improve the chances of reducing the impact of Trump's illiterate gamble in a limited and partial way. Now that world war is looking less likely, the question is has Trump lit the blue touchpaper for a sustained implosion based on liquidation of global debt?
The historical numbers are so out of whack that only a serious political and financial collapse in the US including a run on the dollar will get the world economy out of this stalemate manipulated by gilded age concentration of monetary power.
The likeliest scenario is for a central bank or two to figure out how soon to devalue after the crash, like Britain after 1929 and 2008. This is the first truly global debt crisis. Money has become debt everywhere. Hold you hat when the balloon goes up or explodes, as it must.
Thanks John…for these Insightful comments…and yes, there are the financial imbalances and vast quantities of debt; and the threat of war…Trade wars have in the past led to real wars.
This is the first essay I read of yours and I couldn't be more impressed. Thank you.
I'm always humbled by how much I don't know every time I break new ground. .
Thank you Michael...
The clearest analysis I’ve yet read.
No company is too big to fail
This time let's bail out the people
Very thought-full as always Ann. If one set out to behave in a way that is pure “degenerative” - in direct violation of all of the patterns and first principles they describe how life/health works - they could not do better than to study Trump.
Timely article. Hope the rich and powerful take heed.
The PBOC is making Keynes' vision come true.
It has created a digital currency swap platform, mBridge, that has cut trade transaction cost and time by 90% for the 200 countries in the BRI.
When that is established, it will introduce a reserve facility.
The background: on October 9, 2009, after the GFC, PBOC Governor Zhou Xiaochuan announced, "The world needs an international reserve currency that is disconnected from individual nations and able to remain stable in the long run, removing the inherent deficiencies caused by using credit-based national currencies”. But the first step, he said, would be creating the capacity for trading in domestic e-currencies and bypassing intermediate currencies like the dollar.
The PBOC released the e-Yuan in April, 2021. Public servants who elected to be paid in the traceable e-currency were celebrated for their commitment to transparency and the wild rumpus began.
Russia, China and BIS, the Bank for International Settlements, were development partners with Hong Kong as their headquarters. Thailand has been paying UAE for its oil imports in e-baht for two years, and UAE oil exporters get paid in e-dirham. In 3 seconds, for 11¢. BRICS will start using the platform on January 1, I expect.
The reserve currency will probably wait until 2030.
It's a much bigger deal, for it means the end of the dollar's exorbitant privilege and, therefore, the end of the USA as we know it (and my pension!).
Oh Ann, now what do we do? I’d happily move out of New York, pretend to be Canadian, wear my MAGA (Make America Go Away) hat, but looks like our President (and the puppeteers pulling his strings) is making it hell everywhere.
"...now what do we do?"
We never allow them the satisfaction of our surrender, Elizabeth.
For victories may be sweet, but there is dignity in struggle itself, whatever the odds.
Stay strong, my friend; from one of your millions of allies across the Big Pond.
Surrender isn’t an option obviously, as I am watching my friends pulled off the street by ICE (immigration). Neither is using my licensed handgun a viable option. Armed with my friend Ann’s brilliant analysis, I might be able to sway a few in the direction of sanity. And New York is better than , say, Texas, but you may recall we don’t have nationalized healthcare or basic incomes. But we do have a lot of White Christian Nationalists with military style machine guns. So No Pasaran! La lucha continua! and hasta la Victoria siempre but in the meantime…oh to be in England now that April’s there…
I've been embroiled in asylum solidarity here for the last two decades, Elizabeth; so you have my unequivocal empathy and my militant solidarity (we have Border Force who have a similar mentality to ICE). Fortunately, our own dime-store (pound-shop in Brit-speak) blackshirts do not generally have guns. And we usually outnumber them at least 2 to 1 whenever they come to town. But swaying "a few in the direction of sanity" is THE absolutely imperative task; resistance erupts unpredictably: and whenever it does, it has inevitably been the long culmination of all of these innumerable anonymous, malcontented conversations, held in all of the public and private spaces wherever the dispossessed 99% can be found.
All good wishes from a currently sunny England in April time!🌞
If only economists as a group would unite to make a strong case for the public capture of economic rents while simultaneously reducing the taxation of income earned producing goods and providing services, of the depreciated value of capital goods and of commerce. As Henry George persuasively argued in the late 1800s, the benefits of free trade are significantly eroded because of the private appropriation of economic rents. Some years ago, professor Fred Foldvary estimated that economic rents comprise somewhere around one-third of GDP.
University of California professor Mason Gaffney identified in his writings a long list of the sources of economic rents beyond the core rents associated with locations in town and cities or natural resource-laden lands. He included all natural assets with an inelastic supply (e.g., take off and landing slots at airports) and assets limited in supply because of competition-limiting law (e.g., liquor licenses or taxi medallions).
There is very strong corroborating evidence that the failure to capture a significant portion of the economic rent fund, exacerbated by how government does raise revenue, has manifested the long and ongoing decline in the purchasing power of legal tender. Credit fueled speculation in nature is not only a primary cause of inflation but imposes a high level of stress on economic production and exchange that reaches its breaking point on average about every 18 years.
Howard, thanks for your comment. I am not promoting Bitcoin, my point was about the possibility of internet-native transactions between individuals. I was imagining a series of "bitcoins" which would be immune to inflation, and would take the air out of the cost of Bitcoin which is hyped as being something unique. The value of these tokens ought to trade close to zero. Hence, lots of bitcoin-like offerings. Perhaps some transparent SWIFT exchange between groups would be like this, and perhaps that is what you are suggesting. Very best wishes.
An excellent analysis of the situation, I think.
Thank you Padraic...
I agree with your statement towards the end that "To restore balance to the international trading and financial system requires first increased management of both trade and capital flows. Above all it requires the re-orientation of economies away from the global system and towards boosting the incomes of the 99% in the domestic economy."
In a way this is what Trump is doing for his country albeit in a bombastic way. He obviously has a radical agenda and has a team with people who are used to doing radical things.
You are right on that point Halim…It is true that Trump is responding to heartfelt despair in certain parts of America…only I do not think he is really concerned with their interests. In his long rambling speech on the tariffs last Wednesday - in the middle of which he paused to flog his merch (red caps) - he pulled up a UAW member, who was part of a union delegation in the audience. The man of course praised the president…but went on to say that he had watched as “plant after plant” was closed in his district, with jobs and incomes lost..and was sure the President was going to fix that. His hopes, I fear will be dashed...
I am afraid you are right. It may also be too late to fix the US manufacturing sector malaise no matter what the president does.
Trump is an orthodox merchant of chaos there is no doubt of that. However, confusion and uncertainty is always the momentary reaction to significant change. The problem is we don't recognize the change that needs to be accomplished. Instead of mistaken, wrong headed and ham handed messing with the anomalies of the current paradigm that needs to change you find the key/core applied concept that will resolve the current paradigm's problems. That new paradigm is strategic Monetary Gifting that breaks up the monopoly monetary paradigm for the creation and distribution of new money AKA Debt Only that the private banking system has wielded since the first day of human civilization. Simply initiate a supplemental version of the same accounting process the banks utilize to create all new money (equal debits and credits that sum to zero) with a 50% Discount/Rebate policy at retail sale and everyone's purchasing power is immediately and continuously doubled while chronic erosive inflation is transformed into beneficial price and asset deflation. Of course, even though the above single policy would reduce the rate of increase of private debt by 75%, because "free" market theoretics is a delusional framework for slow motion chaos and instability you'll have to further regulate/bring order out of that lose end by ending the kind of "innovation"/idiocy that brought us 2008, but thats just the reognition that economics is a complex system and we learn by doing as Aristotle said...particularly by learning from mistakes.
With a significant structural trade deficit - ironically thanks to a US-inspired neoliberal ideology - the only way to maintain a positive balance in the non govt sector, or at least minimise the size of the negative balance in the form of dissaving is to substantially increase the fiscal deficit. If we don't learn the lesson from Godley's sectoral balance analysis then our future will be one of a severe debt deflation.
Correct because a deficit is actually what? Thats right a form of monetary gifting, except a government deficit is indirect and not as widely beneficial as a 50% Discount/Rebate at retail sale. Also, unlike a 50% Discount at retail sale a deficit also doesn't terminatedly deal with the fact that due to the fetish of "free" market theoretics commercial agents are free to game and inflate away the purchasing power of that deficit.
The most multilateral of media of exchange would be a Bitcoin-like internet-native medium of exchange accessible to all individuals and any internet-native groups of individuals through the Internet.
This could be Bitcoin itself, or Bitcoin B which would have the characteristics of Bitcoin while bleeding off the speculation. Perhaps China would have the heft to start another Bitcoin- Bitcoin C- and may benefit from doing so-?
Nonsense. Stop trying to use a crisis to pump and dump your Bitcoin holdings. A far better way is China's digital currency alternative to SWIFT which processes transactions substantially quicker than SWIFT and is likely to hasten dedollarisation within Global South trading.
Excellent as ever Ann thank you