Anyone wish to critique the Stockman article, please ?

[steve2470]

State-Wrecked: The Corruption of Capitalism in America

http://www.nytimes.com/2013/03/31/opinion/sunday/sundown-in-america.html?pagewanted=1&_r=0&partner=rss&emc=rss&ref=opinion


Thanks for your time, sincerely.

Steve

[eridani]

1. Odd how he never mentions our very expensive wars of choice

Or reduction of taxes paid by the wealthy, or the fact that the financial monstrosities have captured governments, not the other way around. Anyone who ever uses the term "fiat currency" is full of shit. All currency is fiat currency, including gold. Those who think otherwise should explain why something supposedly having a fixed inherent value should have its prices fluctuate so wildly.

[Warpy]

3. Yes, a lot of giveaways just on the first page.

He's right about the funny money flooding into the market, both from QE and from the phoney money generated by the derivatives bubble. My own thought is that the market should be about half what it is.

The problem is that fiscal policy has been 100% directed toward letting fat cats keep their stolen loot while hardworking people on Main Street keep getting shafted six ways from Sunday on wages and prices, especially wages.

[Loge23]

7. Did you miss this?

"This dynamic reinforced the Reaganite shibboleth that “deficits don’t matter” and the fact that nearly $5 trillion of the nation’s $12 trillion in “publicly held” debt is actually sequestered in the vaults of central banks. The destruction of fiscal rectitude under Ronald Reagan — one reason I resigned as his budget chief in 1985 — was the greatest of his many dramatic acts. It created a template for the Republicans’ utter abandonment of the balanced-budget policies of Calvin Coolidge and allowed George W. Bush to dive into the deep end, bankrupting the nation through two misbegotten and unfinanced wars, a giant expansion of Medicare and a tax-cutting spree for the wealthy that turned K Street lobbyists into the de facto office of national tax policy. In effect, the G.O.P. embraced Keynesianism — for the wealthy."

Not to completely endorse Stockman's dismissal of Keynesianism, but his argument did trash all guilty parties.

[mother earth]

15. One cannot completely dismiss Stockman, he does speak truths...will read this one later. He's

always been an interesting character to me because of this ability to speak truth, he's at least one of the "old school" conservatives n& we do know Reagan outspent everyone. It's a real mix we have these days, no one is black or white, one must read a lot of gray & then decide.

Centrism is going to die, what's going to get us out of this mess will be a new way of progressive and conservative...corporate welfare awareness is rising. Just my 2 cents, for what it's worth.

[Art_from_Ark]

11. I don't think you understand the concept of "fiat currency"

Gold is, by definition, NOT a fiat currency. A fiat currency is a currency-- that is, a circulating monetary medium-- that has its value arbitrarily assigned by the issuing authority, without any backing except for trust in the issuing authority. As a simple example: Two pieces of paper-- or linen, in the case of US money-- have exactly the same intrinsic value, that is, the value of the paper itself is the same for both pieces, which is near zero. But the issuing authority determines than one piece should be given a value of one dollar, and the other piece is worth 100 dollars. It's a completely arbitrary assignment of value. But now one piece of paper is worth 100 times what the other one is worth, merely because its issuing authority has decreed it-- by fiat-- to be so.

On the other hand, gold is currently NOT a currency, because it does not circulate as money anywhere in the world. Its value is determined by its weight and fineness. In the case of modern government-issued gold coins, the face value is ALWAYS lower than the intrinsic value, with the curious exception of the Japanese 100,000-yen gold commemorative, which currently contains slightly less than its face value in gold. If the Japanese coin actually circulated (which it doesn't), it would be an extremely rare example of a fiat gold coin. But as it is, all the other modern government-issued gold coins in the world which have a fixed face value are worth far more than their arbitrary face value. Thus, a coin containing one ounce of gold issued by the United States has a nominal value of $50, but its actual market value is determined by the world gold market (not by any one government), which is currently around $1400. The same applies to, for example, the 100-euro Austrian Philharmonic gold coins-- they contain 1 ounce of pure gold, which means that although their face value is actually higher than the American gold coins of the same weight, their actual market value is roughly the same as that of their American counterparts.

[eridani]

12. When gold is used as currency by a government, it is also fiat currency

That no government is now doing that is irrelevant.

[Art_from_Ark]

13. Wrong

You STILL fail to understand the basic concept of a fiat currency. Gold is, *by definition*, NOT a fiat currency. It is NOT a currency-- it is a monetary medium. A government cannot assign arbitrary values to gold and expect it to circulate like paper money and token coins. The value of gold depends on its weight and fineness, NOT on what some government decides it is worth. Ergo, gold is NOT a fiat currency.

[eridani]

14. The value of gold depends on what people are willing to pay for it

--which has, you may have noticed, varied quite a bit lately. Market values assigned to gold are every bit as arbitrary.

[lrellok]

17. ahh semantics, my old nemesis, we meat again!

I think the two of you are arguing semantics. You are defining fiat as an arbitrary assignment of value by governments only. Erindia seems to be defining "Fiat" as an arbitrary assignment of value by either governments or the market place (assuming all market prices reflect some inefficiency due to speculation or imperfect information, particularly in bubbles, which gold currently seems to be in).

If you feel the term "Fiat" is inappropriate for a market price which is arbitrary (or at least not based on utility value), might i ask what term you might consider appropriate?

[Art_from_Ark]

18. It is NOT semantics

The term "fiat currency" has a specific definition, and eridani's application of it to gold is flat-out wrong, because gold, is, *by definition*, NOT a fiat currency. It is like insisting that gold plate is the same as 24K gold. Or that German silver is the same as Sterling silver.

[Art_from_Ark]

19. The term "fiat" in this case refers specifically to a government action

Governments issue currencies-- markets don't. In all of the currencies in today's world, it is the government (or in the case of the euro, a quasi-governmental authority)-- not the market-- that sets arbitrary values to tokens and paper that make them acceptable for use as circulating money, that is, currency, in the issuing country. However, nothing is backing any of these currencies. It is not like in the past, when, for example, gold coins both circulated as money and acted as backing for dollars in the United States, and the intrinsic value of the gold in a gold dollar was considered to be exactly equal to one dollar. Thus, the dollar at that time was not a fiat currency, because it was being backed by something considered to have universal value, i.e., precious metal.

Today, however, the paper and metals used to represent American currency-- as well as currencies around the world-- are generally worth much less than the face value they represent, and cannot be exchanged for precious metal coins having the same denominations. The paper and tokens only have value because the issuing authority has decreed-- by fiat-- that they have value. However, if confidence in that paper and token money is lost, either domestically, or by the international community, that fiat currency will lose nearly all-- if not all-- of its stated value. And sometimes countries, like what recently has happened in most of the Eurozone, can decree fiat coins to be no longer legal tender, rendering them essentially worthless. However, any precious metal coins issued by such countries still have value based on the amount of precious metal they contain.

[Warpy]

2. He lost me right here

"Under the exigencies of World War II (which did far more to end the Depression than the New Deal did),"

That's the love call of the man who knows absolutely no economic history beyond what a bunch of seriously rich people say to each other to make themselves feel better about pressuring their tame Congressmen to keep declaring bogus war after bogus war against brown people as an economic stimulus measure.

The truth is that the New Deal ended the Depression. What the war economy did is end the Great Recession of 1937, caused by Congressional meddling that ended the New Deal programs that were working prematurely.

I can't critique anything else because I absolutely refuse to read beyond that first howler.

[snot]

4. +1

[Warpy]

5. Thanks. I thought the first response would be a flame

I am decidedly not an economist. I've just read the damned books.

[bemildred]

6. An interesting hodge-podge, populist-libertarian deficit hawk is what I get from it.

Some interesting observations, some I agree with, but his argument has lots of hand-waving and appeals to shibboleths.

And I share his pessimism about any timely corrections to our economic problems.

[Warpy]

8. No, they're all going to sit their with their thumbs up their arses

preserving the wealth of the wealthy until something major comes out of the blue, like the collapse of the derivatives casino.

When that happens, it will take everything, including Congressional fortunes, and they will have to act.

[bemildred]

9. Correct.

You cannot expect well-bribed and spineless weasels to become paragons of virtue just because their selfishness and negligence has had catastrophic consequences for a once great and prosperous nation, right?

[steve2470]

10. Krugman didn't think much of it at all

http://krugman.blogs.nytimes.com/2013/03/31/cranky-old-men/

I think I'll go with Krugman. Thank you all.

[mother earth]

16. Love Krugman too, but I haven't read the article & I will. TY, steve2470. nt

Last edited Sat Apr 20, 2013, 04:57 PM - Edit history (1)

I read the article and also a pro-Stockman review of it which I did not agree with. I think the trouble is that despite real differences between the so called "GOP Keynesian for the wealthy" and Keynesian economics in general, is that Obama et al has bought into the GOP BS of worrying about debt (not that the GOP were ever concerned with it under their watch, and actually have historically outspent ALL democratic presidents, Reagan being the worst - tho I wonder if Reagan still holds the title after GW screwed us over the edge?).

Of course, Krugman is always right, but what's happening is very f'd up...not only have we entered austerity, we've done so with corrupt banking and Wall St. direction. I don't know why Obama thought this was the wise way to go. The oligarchy who brought us financial ruin and monstrous greed, those who seek to socialize risk and privatize profit, have had an enormous say in our economy and have been given incredible powers thanks to SCOTUS. Perhaps this is why we are on course for destruction?

Stockman/Krugman make some good points, but where does it actually leave Main St. America, when no one is looking out or representing the 99%?

Personally, I do think we are going to see worst times relatively soon. Stockman may be right about cash being king, since metals seem vulnerable to the same rigging tactics. IMHO the solution is economic equality or at least measures to take us in that direction. It's as simple as that. Now...if only POTUS would call me. Then, we might all start playing by the same rules.

[mother earth]

20. PS and of course end of the oligarchy and return to rule of law. :) nt