 |
| A lot of bull. |
Talk on “the Street” (when it’s
capitalized like that it’s Wall Street, because that’s where everything is capitalized
. . . right? Wrong, but we won’t go into
that today) is that consumer spending is up, up, up, and that’s a good thing,
right? Yes, it’s a very good thing . . .
assuming it’s in response to people being able to meet their needs and reasonable
wants out of current income. When it
involves buying luxuries on credit — or, worse, necessities on credit — it’s a
very, very bad thing . . . but that’s what’s happening, even though that part
of the equation is being ignored or downplayed.
In other news:
• Turkey and Argentina. Not
to sound simplistic, but Turkey, Argentina, and any other country in the world
could solve their currency and debt problems (or at least make a good start on
them) by shifting the backing of the currency from government debt backed only
by the government’s power to tax, to private sector hard assets, such as
productive capital and existing inventories.
It’s what central banking was invented to do more than three centuries
ago, not monetize government deficits or give politicians a blank check to
avoid the tax and appropriations process. A more sustainable solution, of course, would
be to make everyone a capital owner, financed with self-liquidating capital
credit using new money backed by the assets themselves, not government debt.
 |
| Some recent candidates in the U.K. (no, really). |
• Politics as Unusual? Various
political races across the United States suggest that the parties-that-be are
vying to see who can field the most . . . unusual
candidates. Perhaps this is nothing more
than a sign that ordinary people have simply given up on the political process,
at least that part of it relating to government, and are leaving it to fringe
groups. (In the Aristotelian sense, of
course, human beings are “political animals” because by nature we gather
together and live in structured environments of our own conscious creation, the
polis, so it is
impossible to give up on politics in the broader sense except by chucking it
all and living as a hermit or Robinson Crusoe.)
Seemingly forgotten is the theory that politicians are supposed to
represent their constituencies. Running
a carnival sideshow might not be fully consistent with that theory.
 |
| End of an almost-era? |
• The Fall of Crypto Currencies?
Not likely, given how many people are obsessed with the thought of
getting control over the money supply out of the hands of central banks and
governments, even though the crypto currency phenomenon is going from the
frying pan into the fire if sound monetary theory along the lines of the
Banking Principle is considered. Still,
people may be catching on to the fact that crypto currencies are even more
insecure than those issued by central banks and backed by government debt. After all, you can hold a government
accountable to some degree, but not the issuer of a crypto currency. As noted in the Wall Street Journal, “Digital Currencies Tumble” (08/15/18, A-1,
A-2), “[T]here is still virtually nothing holders of [crypto currencies] can do
besides trade it. They have no practical
utility in traditional markets and in daily commerce.”
 |
| What is driving the economy instead of production. |
• Economic Growth Rising. Or
so it stated in the Wall Street Journal
of August 16, 2018, page A-5, “Retail and Factories Drive Growth.” That, of course, is true — consumer demand
drives the demand for new capital; if there are no customers for marketable
goods and services, there is no reason to produce them; as Adam Smith pointed
out nearly two and a half centuries ago, “Consumption is the sole end and
purpose of all production.” The problem,
of course, is that the day before the Wall
Street Journal had an article noting that consumer debt is higher than it
has ever been before, “Household Borrowing Hits High” (08/15/18, A-3). As the article noted, “Total [consumer] debt
is higher than before the financial crisis, when widespread defaults,
especially on mortgages, contributed to the longest and deepest recession since
the Great Depression.” Putting two and
two together, the so-called economic growth is being fueled by debt, not by production. It is therefore a bubble and can be expected
to burst. When it does, the resulting “recession”
(since the “D-word” is too scary) will be even worse because the underlying
problems were not corrected.
 |
| Walter Reuther |
• “Walter Reuther, Where Are You?”
In his column “Wage Stagnation Is
Everyone’s Problem” (Wall Street Journal,
08/15/18, A-15), William Galston addressed the problem of stagnating wages, but
not the problems associated with raising wages, such as greater incentive to
replace human beings with machines, higher costs to consumers, and thus lower
consumer demand. Walter Reuther, the
late president of the United Auto Workers, had a better solution: turn workers
into owners, and have increases in compensation and benefits come out of
profits instead of adding to costs.
• “Chinese Growth Engine Sputters.”
Having slipped back into third place after artificially boosting its GDP
with gigantic infrastructure projects financed with government debt, China is
now urging its banks to lend for even more infrastructure projects and possibly
institute some tax cuts and increase government spending to “shore up” their
economy in anticipation of a long trade war with the United States. (Wall
Street Journal, 08/15/18, A-18.). At the same time, Chinese debt seems to be
slipping: “Missed Payment Renews Fears Over Chinese Debt” (WSJ, 08/15/18, B-12.) What
China is planning is not a strengthening of its economy, but a serious
weakening. China, Japan, and the U.S.
would do better to work on people’s capacity to produce through capital as well
as labor and thus bolster consumer demand that really drives economic growth.
• Shop online and support CESJ’s work! Did you know that by making
your purchases through the Amazon Smile
program, Amazon will make a contribution to CESJ? Here’s how: First, go to https://smile.amazon.com/. Next, sign in to your Amazon account. (If you don’t have an account with Amazon,
you can create one by clicking on the tiny little link below the “Sign in using
our secure server” button.) Once you
have signed into your account, you need to select CESJ as your charity — and
you have to be careful to do it exactly this way: in the
space provided for “Or select your own charitable organization” type “Center for Economic and Social Justice
Arlington.” If you type anything
else, you will either get no results or more than you want to sift through. Once you’ve typed (or copied and pasted) “Center for Economic and Social Justice
Arlington” into the space provided, hit “Select” — and you will be taken to
the Amazon shopping site, all ready to go.
• Blog Readership. We have had visitors from 31 different
countries and 38 states and provinces in the United States and Canada to this
blog over the past week. Most visitors are from the United States, France, Peru,
Canada, and the United Kingdom. The most
popular postings this past week in descending order were “News
from the Network, Vol. 11, No. 32,” “The
Economic and Financial Revolution,” “Is
Development Bad?” “Just
Third Way Podcast No. 29,” “The
Rise of Democratic Socialism.”
Those are the happenings for this
week, at least those that we know about.
If you have an accomplishment that you think should be listed, send us a
note about it at mgreaney [at] cesj [dot] org, and we’ll see that it gets into
the next “issue.” If you have a short
(250-400 word) comment on a specific posting, please enter your comments in the
blog — do not send them to us to post for you.
All comments are moderated, so we’ll see it before it goes up.
#30#