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View Diary: STUNNING article: It's "D-day in the class war" (522 comments)

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  •  To be exact, the problem is what elites BELIEVE (30+ / 0-)

    Look, the actual mechanism that is wrecking the U.S. economy is USURY. As I commented a number of weeks ago:

    The problem is that conservative economics, a.k.a., neo-liberalism has become the reigning economic theory, and it brooks no competition. How the reigning economic paradigm came to be so, has been described by a number of opponents, most recently by a handful of heterodox economists who testified before the Subcommittee on Investigations & Oversight of the House Committee on Science & Technology, Building a Science of Economics for the Real World.

    SNIP

    Now, the interesting thing about this hearing is that nobody is willing to mention the elephant in the room, which is that the reigning body of economic theory quite clearly serves as justification for usury, speculation, and other means of looting by a class of financial and corporate oligarchs. Another example of this deliberate reluctance to name the obvious is Thomas Philippon's otherwise excellent study of Are Bankers Over-Paid?. In Philippon's case, he resorts to the fairy tale of deregulation to explain away the looting by the financial sector. It's worth reading the entire short article to see what I mean. And his charts are priceless.

    Back in October of last year, Ryan Grim reported on Huffington Post How The Federal Reserve Bought The Economics Profession:

    The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.

    This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed's thrall, the economists missed it, too.

    "The Fed has a lock on the economics world," says Joshua Rosner, a Wall Street analyst who correctly called the meltdown. "There is no room for other views, which I guess is why economists got it so wrong."

    SNIP

    The problem with Obama (in my thinking at this point) is that he has never been exposed to alternatives to "neo-liberal" economics, or if he has heard of them, such as Marxism, he has rejected them. I seriously doubt that he has ever actually read anything by Thorstein Veblen, for example, or knows very much about the progressive populist movement of the 1870s through 1890s.

    Really, we're at the point where with a few dozen very rare exceptions, who can take all 15,000 or so economists in the U.S. right now, lock 'em up in Guantanamo, and render almost all our economic problems solvable.

    Stop and think: on economics, who could Obama possibly call that would give him an alternative view to mainstream economics? Try a little test, if you have one or more college economics textbooks on your bookshelf. Look at the index, and see if the word "usury" appears.

    I used Amazon’s look inside function to check some of the most popular economics textbooks.


    "Usury" in not in the index of N. Gregory Mankiw’s Principles of Economics, reportedly the most used economics textbook today.  I could not check the newest Nordhause edition of Paul Samuelson’s Economics, which used to be the most assigned economics textbook, but the word "Usury" does not appear in the recent reprinting of Samuelson’s original 1948 Edition. How about International Economics: Theory and Policy, by Paul R. Krugman and Maurice Obstfeld. Nope, not there either. Macroeconomics: Principles and Policy, by



    William J. Baumol and Alan S. Blinder? Nope. Supercapitalism: The Transformation of Business, Democracy, and Everyday Life, by Robert B. Reich? Not there, either. How about Joseph E. Stiglitz?  No, I could not find "usury" in the index of two of his books, Making Globalization Work (2007), and Globalization and Its Discontents (2003). I have a copy of James K. Galbraith’s The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too, and "usury" is not in that book. Neither is it in Simon Johnson’s and James Kwak’s 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown.

    What’s the point I’m trying to make? Simple: the field and profession of economics today has been thoroughly purged of anyone who would dare to insist on making moral judgments about economic outcomes. This is the complete triumph of Milton Friedman’s radical "free market" "free trade" economic "neo-liberalism." The fact is that the issue of usury was one of the most contentious and persistent in Western history. The practice of usury has destroyed kingdoms and nations through all of recorded human history, yet American economics today has excised the issue entirely from its academic corpus of work. One of the few economists willing to openly discuss the problem of usury is Michael Hudson. I very highly recommend that everyone spend the rest of the evening reading his excellent 1993 study, The Lost Tradition of Biblical Debt Cancellations, in which you can learn that

    In 1516 Martin Luther preached a sermon on the Eighth Commandment, classifying usury as a form of theft and warning that it was destroying cities much as a worm destroys an apple from within its core. Jews were forbidden from taking interest from one another (permitted to charge it only to outsiders), but Christians charged it to their own brethren. The papacy itself sponsored the Italian bankers to drain money to Rome. In a similar vein, John Calvin, in the final year of his life, wrote a commentary on Ezekiel (published in 1565), defining fraud and usury as theft. He held that wealthy lenders were as guilty as robbers and highwaymen in breaking the Eighth Commandment (Hyma 1951:283ff., 443ff.).

    So, what panel of economic experts can the President convene that will tell him about the problem of usury, and how it is destroying our republic? Except for Hudson, there are no such experts. As Hudson writes near the beginning of his study:

    what was radically disturbing in archaic times was the idea of unrestrained wealth-seeking. It took thousands of years for the idea of progress to become inverted, to connote freedom for the wealthy to deprive the peasantry of their lands and personal liberty.

    Can any single individual, even if they hold the office of President of the United States, be expected to learn an economics concept that the entire effing economics profession refuses to even discuss or even acknowledge? This is a problem not just with conservatives, but, as the list of economics textbooks above shows, with liberals and progressives, including some of the very best we have in economics.

    A conservative is a scab for the oligarchy.

    by NBBooks on Thu Nov 18, 2010 at 09:28:34 AM PST

    [ Parent ]

    •  Rec'd 1,000,000,000 times (7+ / 0-)

      This goes straight to the heart of the problem. We need a diary a day posted on this.

      Ds see human suffering and wonder what they can do to relieve it. Rs see human suffering and wonder how they can profit from it.

      by JTinDC on Thu Nov 18, 2010 at 09:38:55 AM PST

      [ Parent ]

    •  exactly (13+ / 0-)

      debt is evil, debt should be avoided if at all possible,  yet americans have been fooled into thinking debt is just a normal function of life.

      Americans have sold themselves into debt for loads of crap and junk.

      I see americans now buying new cars when their old ones work just fine, they go into major debt to do it, and I think, what is wrong with you people?

      I mean the malls are filled all the time, is there anything that mall sells that is really neccessary?

      but yet, since americans are no longer paid well, in order for the economy to keep moving via consumerism, debt is the only vehicle we have.

      Its just one of the many reason, this catch 22, that I dont forsee how america doesnt collapse into a third world type state.  Its unavoidable.

      The child has grown, the dream is gone. I have become comfortably numb.

      by dark daze on Thu Nov 18, 2010 at 09:41:49 AM PST

      [ Parent ]

    •  Pretty good comment (0+ / 0-)

      Kind of short, though, perhaps you could expand on it :)

      How do you mean the word "usury"-- do you take it to mean any interest on loaned money, or only excessive interest?

      Why is usury bad? I can think of a couple of reasons, but I'd be intersted to hear your concise explanation.

      •  Jon Larson explains the "Natural Usury Point" (5+ / 0-)

        in his chapter on "Money" in his 1991 book, Elegant Technology: economic prosperity from an environmental blueprint. What you must understand first is that Larson adopts the strict Veblenian distinction between "business" and "industry" as major categories of economic activity. Simply put, it is industry that creates wealth, while business merely manages, accumulates, and loots wealth.

        Over the years, there has been a huge argument over the subject of usury. In the beginning, usury was defined as any interest payment. For 1500 years, Christianity taught that usury is a sin . Since without interest payments, money-lending would not happen, Christians turned to Jews for the service until John Calvin came along and made moneylending at interest something Protestant Christians could do. Lending created prosperity which, in turn, took the onus off charging simple interest.

        This did not, however, stop the argument over usury--which now became the process of charging excessive interest. The question becomes "What is excessive?"

        The industrial answer is simple. If the basic rate of interest is higher than inflation plus growth in G.N.P., damage will eventually accrue to industrial societies. Since the goal is growth and producers who are successful in validating new money should and must be rewarded, the point where interest becomes usury is slightly less than the growth in G.N.P. plus inflation. This point, hereinafter referred to as the Natural Usury Point, (NUP) would be 6.5% if inflation were 4% and growth in G.N.P. were 3%. Any figure above NUP will cause deflation and other forms of economic distress. Any figure below this rate will cause general and widespread prosperity.

        I urge anyone to spend the time to read the entire chapter: Money—and how it rules our lives.

        A conservative is a scab for the oligarchy.

        by NBBooks on Thu Nov 18, 2010 at 11:45:03 AM PST

        [ Parent ]

        •  Also, Larson posits six stages of socio-economic (6+ / 0-)

          collapse. We are nowin the final of six stages of socio-economic collapse, From Jon Larson at his Real Economics blog:

          . . . . the fraud was also foreordained.  When you make an impossible claim, like that you can promise a 10% return on an investment over the long term, eventually you must cheat to do the impossible.  And why do we know it is impossible:  Because geometric growth of the real economy in a finite biosphere is impossible over the long term.  It is Rule of the Biosphere #1.

          I wrote in Elegant Technology about the dangers of excessive growth expectations as manifest by the practices of usury.  This wasn't this big stunning prophecy in 1990--it was merely a restatement of the idea that even eigth-grade arithmetic still works pretty well.

          Stage 1 Damage. The first victims of usury are small producers in competitive, credit-sensitive industries. Start-up enterprise must compete in shrinking markets. Most fail.

          Stage 2 Damage. Existing companies take shortcuts, defer maintenance, cut back on R&D, etc. Wages drop. Layoffs begin

          Stage 3 Damage. Social order is disrupted. Financial institutions start taking unnecessary risks because few producers can pay the returns required. This leaves the fools and charlatans. Layoffs cascade. Governments are stressed trying to cope.

          Stage 4 Damage. Whole industries begin to fail. Sections of the country are ruined. Homelessness and crime increase. Prosperity, such as is left, becomes further and further removed from the production of goods.

          Stage 5 Damage. Financial institutions begin to fail. Orderly financial transactions are replaced by speculation, greenmail, etc. Sober bankers become gamblers and crooks.

          Stage 6 Damage. Governments are bankrupted. Insurance for financial institutions are exhausted. Financial distress becomes widespread.

          So now we are in Stage 6 Damage Globally. 30 years of crazy people running the economy who literally believed that asking 10% returns was a sign of financial modesty.  And yes the fraud stories will get lurid.

          A conservative is a scab for the oligarchy.

          by NBBooks on Thu Nov 18, 2010 at 12:01:46 PM PST

          [ Parent ]

        •  Excellent answer! (1+ / 0-)
          Recommended by:
          Only Needs a Beat

          I like the elegant definition of Natural Usury Point.

    •  Sharia law against usury, too (5+ / 0-)

      Which may be the real reason Oklahoma et al. are so keen to ban its use as a basis for legal rulings-- a judge could use it to void foreclosure or credit card collections actions.  (removes tinfoil hat, unfolds it carefully to reuse for tenting the turkey)  

      "A city for sale and doomed to speedy destruction if it finds a purchaser!" --King Jugurtha

      by LucyandByron on Thu Nov 18, 2010 at 10:44:48 AM PST

      [ Parent ]

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