Graeber was right

Continuing this line of thought.

DELONG SMACKDOWN WATCH: MONDAY HOISTED FROM COMMENTS WEBLOGGING

Commenter Blissex:

But safer jobs and better wages are "inflationary", and booming speculative asset prices are not, so hurrah for the policy of a flood of cash.

Then Ronald Reagan came in, said what the US economy really needs is tax cuts, and that pushed the debt up by a lot.»

That was the beginning of the application of Jensenism (as Henwood, the author of "Wall Street The Book" calls it), but applied to whole countries: loading a company or a government with debt leads it to be constant pressure so it will squeeze its suppliers and employees harder and harder to repay the debt. 

And loading a company or government with debt offers the fantastic opportunity of asset stripping: taking out as much debt as possible to pay out large dividends. Which is what happened when the USA government borrowed from the OASDI trust fund to pay for massive tax cuts on high income or high wealth taxpayers.

My reply:

"That was the beginning of the application of Jensenism"*
Also known as the Littlefinger/Lord Baelish strategy.
Maybe Graeber had the right idea but was poor on execution. See Mexico/Brady bonds/Cold War.

In last night's episode Tyrion was made the new master of coin. He went through Littlefinger's books and discovered all he did was borrow, from Tywin Lannister and the Iron Bank of Bravos.

Yglesias references Game of Thrones.

Slate reviews last night's episode. My response:

"Tyrion was quick to see the problem of owing the Lannisters was one thing, but that owing the Iron Bank of Braavos was an entirely different problem, especially in a land that is being claimed by several other kings. I am fully looking forward to the episode where he singlehandedly implements an austerity model for the Red Keep."

Lord Baelish's strategy is basically "Jensenism" i.e. political conservatives' modus operandi regarding both companies and governments: load up on debt and loot. With companies it also puts pressures on workers to bargain away compensation gains. With governments (see Reagan and W.) it puts pressures on services and entitlements.

What Tyrion found out last night is in the books as is the basic fact that Robert Baratheon did nothing to oversee what Littlefinger was doing, dismissing it as "counting coppers."

But coincidently, Benioff's father ran Goldman Sachs for a while.

As far as new austerity measures goes, King's Landing is already under Greek-like conditions as we saw last season when the starving common people rioted. Lady Margaery and Highgarden are doing a little to mitigate things.

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* Theories of Michael Jensen. A commenter here mentions "Jensenism" also. On a sidenote, "Game of Thrones" co-creator David Benioff's father is Stephen Friedman, former head of Goldman Sachs.