Modernity

Regarding this review of Marx which I thought was too critical and kind of lacking, there's also this from Krugman about Modernity:

Horse Soldiers Blogging by Krugman

And now that we’re at the 150th anniversary of the raid, I’m going to have a chance to start indulging my U.S. Grant obsession. I’ve always had a thing for Grant — the stubby, unprepossessing guy who failed at most things until he turned out to have a unique understanding of modern war. The scene at Appomattox — aristocratic Lee in his dress uniform surrendering to disheveled, unimpressive-looking Grant — represents for me the coming of the modern world.

Marx was very much in favor of the bourgeoisie winning over the artistocratic feudal class and modernity triumphing over feudalism. As a journalist he wrote in favor of Lincoln over the South. And he campaigned against Britain's support of the South.

But part of what I like about Game of Thones and its setting are the notions of honor and solidarity. With capitalism you get the "cash nexus" - as Marx put it - which dissolves everthing - religion, nationalities, solidarities - into air. Everything has a price but no value. The global elite becomes detached from its home fellow nationals. The social convention of exchange value trumps everything else like use value. Virtues and morality is devalued.

The financial sector becomes a giant parasite on the "real" economy.

Graeber and zombie Marxism

Robert Kuttner reviews Graeber in the NYRB.

review of a new book on Marx.

Few Seniors Have Large Amounts of Money Invested Exclusively in Short-term Accounts by Dean Baker

The Post had a lengthy piece about seniors being ripped off on their savings by scam artists promising high returns. While this is a serious problem, the article implies that the low interest rate policy by the Fed is a major factor pushing seniors in this direction. 

Actually, very few seniors have large amounts of money in short-term accounts that would be hurt by the Fed's low interest rate policy. According to Federal Reserve Board's latest Survey of Consumer Finance, around 15 percent of seniors have $25,000 or more in short-term money. Most of these people are likely to also have money in stock, which has provided very good returns in the last three years. They may also hold longer term bonds, the price of which has risen sharply as interest rates fell. 

Even if a senior just held their $25,000 in short-term money, the hit from the low interest rate policy would still be limited. If we consider a 3.0 percent interest rate to be normal and assume that they are now getting a near zero interest rate, the loss to a senior with $25,000 would be around $750 a year. This is approximately the same hit that a senior with a $20,000 annual Social Security benefit (roughly 30 percent above the average) would see after 13 years under President Obama's proposal to change the base of the cost of living adjustment to the chained CPI.

Blowing the legs off of Boston marathon runners seems like something the Joker or Bane would do. A cruel, evil joke. (Think of the Joker's talk with Two-Face at the hospital in the Dark Knight.) It's also a bit like Locke cutting off Jaime's sword fighting hand to shut up him up and stop him from ever being patronizing ever again. "This will help you remember that your father isn't here." Of course people will say any analysis is providing an alibi or an excuse, but that's not true. It's just thinking out loud which is what a blog is for.

The terrorists were two young Chechen brothers living in Boston. 

Originally from Chechnya, but living in the United States since five years, Tamerlan says: "I don't have a single American friend, I don't understand them."

If he wins enough fights ... Tamerlan says he could be selected for the US Olympic team and be naturalized American. Unless his native Chechnya becomes independent, Tamerlan says he would rather compete for the United States than for Russia.

Tamerlan says he doesn't drink or smoke anymore: "God said no alcohol." A muslim, he says: "There are no values anymore," and worries that "people can't control themselves."

I don't think many clueless, spoiled, solipsistic Americans (I vote Republican and train for marathons!) really understand how Russia flattened Chechnya in the 1990s. Or how Russian-backed Serbs slaughtered Muslims in Bosnia.* Or how Israel oppresses the Palestinians. But why blame America? "There are no values anymore"? Is that it? There is reporting that they were/are Muslim extremists.

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*Of course the Left treated Bosnian Serbs as victims of Imperialism. Even though Vietnam was ahead of my time, I was with the anti-war movement on that. But then they were silent on Chechnya and Bosnia or critical of America's Imperialism, that is, anti-American.

More on missing downward price pressure (hint, blame corporate profits) by Josh Bivens

But, I’d also note something else holding up prices—the determination of the corporate sector to earn historically high profit margins. The Bureau of Economic Analysis (BEA) has a great table on prices and unit labor and profit costs for the non-financial corporate sector, which accounts for just about half of the U.S. economy. In the NFC sector, prices per unit of output since the end of the recession are up just 4.1 percent. But labor costs per unit of output are down by 1.1 percent. Given that labor costs are more than 60 percent of overall prices in the NFC sector and that they’re falling, this must mean some other cost component in the production process with a much smaller share is rising a lot to drive prices up.

Meet corporate profits per unit—up 63 percent (60 percent after-tax) since the recession’s end. In fact, the growth in after-tax corporate profits can explain all of the 4.1 percent price increase between the end of the recession in the middle of 2009 and the end of 2012 (see the figure below for a breakdown).

There are many good reasons to think that upward pressure on prices is a useful thing in the U.S. economy right now, but I’m not sure that rising profits is one of them.

(via Thoma)

AV Club reviews "Covert War" from "The Americans."

Highgarden!

Don't Believe The Hype—House Tyrell is Richer Than House Lannister by Yglesias

How central banks beat deflation by Martin Wolf

(via Thoma)

What  about Japan?

The Bear and the Maiden

The Hold Steady Cover George RR Martin.

No Logo

On Game of Thrones I liked Anguy the archer who's in the Brotherhood Without Banners with Thoros of Myr. Tywin called it a pretentious name but that's often what authoritarian conservatives do to anything that opposes them, like liberals. Locke found Jaime pretentious as well.

And Lady Oleanna, the Queen of Thorns, reminds me of Gore Vidal!*



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*And Hitchens! The way she ordered about the help. "You'll bring the cheese when I want it and I want it now." Hitchens could be bitchy and demanding at a rude waiter or cab driver. Her confidence and articulateness, speaking in paragraphs;  the way she showed no fear and understated her reaction to the revelation that the rumors are true and Joffrey's a monster. "Well that's a pity."

The Thomas Amendment and monetary policy

'This is Bad Economics ... But it is Excellent Preaching' by Thoma

The Thomas Amendment

Attached as Title III to the Act, the Thomas Amendment became the "third horse" in the New Deal's farm relief bill. Drafted by Senator Elmer Thomas of Oklahoma, the amendment blended populist easy-money views with the theories of the new economics. Thomas wanted a stabilized “honest dollar”; one that would be fair to debtor and creditor. 

The Amendment said that whenever the President desired currency expansion, he must first authorize the Federal Open Market Committee of the Federal Reserve to purchase up to $300 billion of federal obligations. Should open market operations prove insufficient the President had several options. He could have the U.S. Treasury issue up to $3 billion in greenbacks, reduce the gold content of the dollar by as much as 50 percent, or accept 100 million dollars in silver at a price not to exceed fifty cents per ounce in payment of World War I debts owed by European nations. 

The Thomas Amendment was used sparingly. The treasury received limited amounts of silver in payment for war debts from World War I. Armed with the Amendment, Roosevelt ratified the Pittman London Silver Amendment on December 21, 1933, ordering the United States mints to buy the entire domestic production of newly mined silver at 64.5¢ per ounce. Roosevelt’s most dramatic use of the Thomas amendment came on January 31, 1934, when he decreased the gold content of the dollar to 40.94 percent. However, wholesale prices still continued to climb. Possibly the most significant expansion brought on by the Thomas Amendment may have been the growth of governmental power over monetary policy. 

The impact of this amendment was to reduce the amount of silver that was being held by private citizens (presumably as a hedge against inflation or collapse of the financial system) and increase the amount of circulating currency.

Blackfish

Dean Baker, Doug Henwood and Duncan Black. To the Edumures of Krugman, DeLong and Yglesias. Thoma is an honorable polymath giving respectable hearing to a variety of views.

Baker, Henwood and (I believe) Black keep the eye on the ball about the war against organized labor. Baker and Henwood especially. DeLong and Krugman are trained academics who for instance didn't discuss how Thatcher attacked labor. Yglesias has learned much from DeLong and Krugman and tends to kick teachers' unions and troll about the subject. Baker and Henwood are outside the academy, although Baker does get quoted in the New York Times and Baker's EPI gave Krugman an award recently. Baker and Henwood will often post how they aren't given due credit for getting things right and I think they are justified in their complaints.

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.

AV Club reviews Game of Thrones "Walk of Punishment" (newbies)

AV Club reviews Game of Thrones "Walk of Punishment" (experts)

Status Quo - Pictures of Matchstick Men

Missing Deflation by Krugman

Three points here: 

1. This does say that there is little risk of accelerating inflation. Indeed, Hobijn and Daly suggest that there’s a “pent-up demand for wage cuts” that will probably push inflation lower even if the economy is recovering. 

2. Central banks and other policy makers will be making a terrible mistake if they look at low, stable inflation and pat themselves on the back for a job well done. Low, stable inflation, it turns out, is entirely consistent with catastrophic economic mismanagement. 

3. Notice how Keynesians responded to the partial failure of a prediction: by asking what they got wrong, and how their model of the world needed to be adjusted. This, of course, shows what fools we are: everyone on the other side of these debates knows that you respond to mistakes by never acknowledging them, and doubling down on whatever you originally claimed.

This is sort of in agreement with a point Dean Baker has been pushing over the years: low inflation is just as bad as deflation.

Its cock rages on!

AV Club reviews Spartacus series finale "Victory."

The mystery of stable prices by Ryan Avent

#slatepitch

Does Obama's Positition on Chained CPI Make Any Sense? by Yglesias

That said it's perfectly coherent to think that the Chained CPI gives a more accurate read of the actual trends in consumer prices without being enthusiastic about using it to reduce Social Security benefits. I can speak from experience since I think the CPI-W overstates inflation, but I'm not excited about switching to the C-CPI-U. That's because to say that the CPI-W slightly overstates inflation is simply to say that the real value of Social Security benefits increases slightly from year to year. But is that such a bad thing? On the contrary, I'd say it's an excellent thing.

Correction for NYT Budget Piece: Economists Do Not Believe that a Chained CPI is a More Accurate Measure of the Cost of Living for the Elderly by Dean Baker

This comment is misleading since the issue with Social Security benefits is whether the chained CPI better reflects the cost of living of the population drawing Social Security checks. That is actually distinct from the rate of growth of out of pocket health care expenses, which would show that the cost of living for seniors as they age rises much more rapidly than the CPI.

There is good reason to believe that it does not. The Bureau of Labor Statistics (BLS) has an experimental elderly index that has consistently shown that the elderly experience a rate of inflation that is somewhat higher than the CPI that currently provides the basis for the annual cost of living adjustment. The main reason is that seniors spend a larger share of their income on health care and housing than the population as whole. Since these items tend to rise more rapidly in price, their cost of living rises somewhat more rapidly than what is shown by the current CPI.

It is also not clear that seniors substitute to the same extent as is assumed by the chained CPI.

This would mean that a switch to a chained CPI would overstate the extent to which seniors benefit by substituting to goods that are rising less rapidly in price.

For this reason, many economists have advocated having the BLS construct a full elderly index which would track the rate of inflation in the specific items purchased by seniors at the stores at which they shop. This would provide a more accurate measure of the rate inflation seen by seniors. 

It would have been useful if the NYT had made this point in its budget article. The comment about the views of economists on the accuracy of the chained CPI for the general population is at best misleading. It is not an issue that is relevant for the current debate.

AV Club reviews The Americans "Only You"