One of the unfortunate problems that comes from long periods of claims being presented and left unchallenged is that a certain mindset is left to grow where beliefs akin to pixie dust can find root and become "common."

An example of this is found in the relatively common left-wing view that deficits don't matter, (aka Krugman.)  Another, and the focus of this article, is found among a self-styled group called the Global Monetary Forum, which has produced a newsletter that breathlessly proclaims in its opening paragraph:

For those who would hear it, this first issue of the Global Monetary Forum newsletter is, or represents, one of the most important things happening in the world of economic journalism this week.  Why?  In these dozen pages, a dozen highly influential monetary experts – some with recent books on every Economics bookshelf and some with organizations making a stir among government leaders across the globe – here join as members of a united international coalition.

Oh really?  One of the first indications of trouble comes right here, just down the page:

....This time, our most aware and purposeful thinkers are no longer of a mind to tolerate what history shows us to be unnecessary debts and austerities in the face of increasing challenges to basic security in a time of climate change.......

You mean the now-proved false claim of "global warming", right?  That great scientific fraud in which adjustments to measured temperatures are used to claim that warming has happened that doesn't actually exist?

This group hails from the premise that one can simply solve these problems by moving to a world of debt-free money issuance, and then pontificates the following:

IT WILL NOT INVOLVE INFLATION.  In its simplest and most easily-implemented form, we have a proposition before us of using historically familiar government-issued rather than government-borrowed money to fund some or all of our already-approved budget deficits.  This would not involve governments spending one cent more and thus would not have any inflation-causing effect whatsoever. In fact, by generally accepted economic theory, it would limit inflation if our governments avoid raiding the capital markets.

At this point the editor of said paper has committed an act that, in my opinion, is cardinal sin: He has printed a falsehood that is able to be mathematically disproved.

Let us stop here with our reading of said paper and attempt to dispose of that claim, one way or the other.  You see, we must because if in fact the claim made there is false then everything else propounded in that paper is unworthy of further debate.

We begin with first principles: What is money?

"Money", in the economic sense, is all available currency and credit.  That is, cash spends the same as your credit card; they are said to be fungible.

Note that your car loan, your mortgage and similar are also all fungible with cash.  That is, should I hold such paper (or, more-likely as an investor, bonds created from them) I can pledge them as collateral and by doing so their "value" is spendable, exactly as is cash.

In a system where all money is issued as debt we need merely look at the Fed Z1 to determine "how much" money is available in the economy, since the Z1 categorizes and details levels of debt of various sorts; determining the total is a simple matter of addition.

In a system where currency is issued debt-free the same addition is in force, plus one simply adds the amount of non-debt-bearing currency to the amount of debt in the system to reach the total.

Having defined "money" in the economic sense we now turn to the centerpoint of everyone's claims: GDP.

See, GDP is sort of the Holy Grail of economics.  Everyone wants to see growth, and the broadest means of looking at it is found in the GDP statistics.  Growth is what leads you to pay more than the liquidation + dividend value of a company, for example; absent that nobody in their right mind would ever pay more for a stock than the sum of the discounted cash value of the dividends, if any, plus liquidation value of the firm.

But there's a problem with GDP as it's reported, and that's the fact that it's intentionally reported in a fashion to mislead you.  That is, it's reported in "dollars" (or whatever currency is in use in that nation.)

This is intentionally misleading because the amount of money in the economic sense is not a constant.

That is, GDP is really being reported as the product of Q(Money) * Q(Output) where "Q" is the quantity of each.

Basic logic tells us that in order to measure something on an invariant basis we must use a unit that is invariant -- that is, one that does not change.  GDP is not measured in such a unit on purpose, although it could be -- it could be, for example, measured in Joules of Energy required to produce each unit of output, which is an invariant physical constant.

Since it is not, however, and there is no record-keeping done that would allow us to accurately go back and retrospectively re-calculate it this way, we are forced to instead reduce the equation.

So what we'll do is use our first-semester algebra, which returns to fundamentals: Mathematics is truth.

Since GDP is stated in dollars we can reduce GDP to a numeric figure by dividing it by the amount of money in the system.  Fortunately we have both GDP and "money" from an economic system perspective; one is produced by the BEA and the other in the Fed Z1.

What we get is unitless and thus is worthless as a means of measuring absolute output. 

But it is very useful, indeed, it is definitional, as a means of measuring relative output against the supply of what acts as money in the economy!  That is, we can reasonably use this as the definition of economic efficiency, or how much "stuff" (goods and services) we are able to produce for each unit of "moneyness" in the economy as a whole.

As you can see the economy is about 43% as efficient in producing "things", whether goods or services (GDP), as it was during the period from 1963 to roughly 1970, and about half as efficient as it was in 1980.

What happened?

That's simple: Government deficit spending.

Now here's the point of this missive: It does not matter whether the money is issued as a debt-bearing instrument or by pure fiat.  The reason is simple: 2 + 2 = 4, no matter whether the money is issued as debt-bearing or not.

That is, if you deficit spend with fiat-issued (non-debt-backed) currency the exact same addition to the denominator occurs as if you do so with debt-based currency.

Further, the lower you are on the economic ladder, that is, the closer you live to "hand-to-mouth" the more this efficiency matters because closer to every unit of currency you earn must be spent and as such it cannot be accumulated and leveraged.

Therefore, if you truly seek to decrease "inequality" in the economy and improve the ability of people to "get ahead" by their own effort you want to see economic efficiency per unit of "moneyness" rise.

That is the only means by which those at the lower end of the economic spectrum both improve their economic outcomes and increase the odds of moving up the economic ladder.

Let's look at two possible circumstances:

• Government does not spend in deficit.  That is, government first taxes from the common citizen, then spends the funds it collects.  There is no net addition to the money supply created by government in this instance, thus no increase in the denominator, and thus as economic output increases the ratio above goes up instead of down.  That is, economic efficiency improves.
  
  
• Government does spend in deficit.  That is, government first spends the money and then never collects it in taxes -- not now, not tomorrow, not ever.  There is an immediate net addition to the money supply created by government in this instance and it does not matter if the money is debt-backed or not.  As a result the ratio shown above decreases.  That is, economic efficiency decreases.

Note that the outcome in both instances is the same in terms of the immediate impact of deficit spending: In both cases the monetary dilution is immediate and of exactly the same size.

So why "print" the money, in short?

I argue there are two possible explanations for the attraction to this idea, with the first being the simple one: Those proposing such a system simply have not thought it through as none of them are in fact proposing a system in which no deficit spending takes place but rather one in which "moneyness" in the economy is balanced against economic output measured in an invariant unit such as Joules of energy.

The other possible explanation, that of intent to remove all restraint on deficit spending for social purposes, however, is one we must seriously explore as an argument for the non-debt-based issue of currency, if actually for this purpose, is not put forward from ignorance but rather proceeds from an intent to both deceive the public and screw them.

To do so we must understand the role interest plays in the decision-making process.

Absent interference with interest rates (e.g. market manipulation by banks or traders, government interference, central banks playing games, etc.) the rate of interest for a near-zero-duration loan with no default risk (e.g. a 4-week bill) will always be no lower than the increase in money supply during that period.  The reason is simple: Nobody ever intentionally lends money at a loss.  Further, there is a zero nominal interest boundary irrespective of monetary conditions because the option to simply stuff said funds in a locked safe always exists as well.

Because everyone seeks to make a profit borrowing for any purpose that does not expand economic output at a rate that exceeds the growth in the economic money supply, meaning the sum of growth of both currency and credit, is uneconomic.

The only economic purpose for borrowing is to build something that returns more than both the amount borrowed and the interest expense.  That is, the economic impact must exceed the monetary dilution; if it does then the borrowing is economic.  If it does not then it is not.  This is arithmetic, not politics, and cannot be avoided.

Here's the problem from a government perspective: All deficit spending that goes toward anything other than infrastructure, that is capital investment, is by definition uneconomic.  Such spending on unemployment, pensions, disability payments, warfighting, food stamps and similar is always an uneconomic decision.

Such spending can certainly be defended (after all, by definition government exists to provide common goods and services to the public) but only when funded by current tax revenue.

The presence of interest charged on government borrowing is thus an inhibitory factor on government deficit spending for other than purposes of infrastructure construction and improvement.  The response to this inhibitory factor has been for The Federal Reserve and government to act to suppress interest rates below the parity value -- something that would never happen absent said interference thus allowing deficit spending for non-economic purposes to occur.

It is a historical fact that such spending has not only occurred it has become rampant in the last 20 years and the pressure to not only continue but accelerate that spending from the left is utterly deafening, whether the program is disability, food stamps, "gimme" educational loans (e.g. "forgiveness"), unemployment or "free" medical care.

If you remove the inhibitory factor of interest expense by issuing debt-free money there is no inhibition whatsoever to be found in literal infinite monetary expansion for the purpose of spending on "disability", food stamps and other forms of handouts.  

Further, I offer into evidence the fact that many of the proponents of such a change in our monetary system in fact advocate for greatly increased left-wing style social spending programs and giveaways in exactly this form.

I cite Ellen Brown's knowing false statement in her contribution to this newsletter:

Only when the economy is at full employment, or when resources or supplies are scarce, are prices driven up.

Is that so?  Is post-secondary education scarce?  How about stocks?  What has happened to the price of both?  Are you going to argue, with a literal tripling of the stock market over the last few years and a 30-year history of educational cost increases grossly beyond the rate of ordinary inflation that those prices have not been "driven up"?

Then there's Scott Baker:

History shows it is government, not the private banking system, which has been the more responsible and least inflationary money-issuer.

Really?  The Federal Government today (2014/Q3) has issued $12.845 trillion in "marketable" debt, which is incidentally all directly inflationary.  Just seven years ago that stood at just over $5 trillion, which means it has well more than doubled over a seven year period.  

That is a compound annualized increase of approximately 15%!

"Most-responsible" and "least inflationary"?  That's a knowing lie.  Further and more-importantly it is theft and fraud committed upon those without the franchise who have no obligation on a moral or ethical level to pay.

Further, and perhaps most-importantly, absent deficit spending there is no political reason for the government or central bank to tamper with interest rates.  As a result the positive cost of using debt naturally inhibits all such use for either speculation or consumption.  Coupled with a One Dollar of Capital standard imposed on banks that are licensed to trade in said currency and its products private tampering with the currency is also prohibited.

In other words absent deficit spending there is no government caused inflation at all, nor any reason for the government to demand political tampering with interest rates.  Add One Dollar of Capital to the mix and there is no longer private tampering either.

So why is it, once again, we're talking about issuing debt-free money?

Does that argument proceed from ignorance or is it cover for a social agenda of unlimited uneconomic spending on various social pet projects, none of which are to be funded with current tax revenues?

Arithmetic is truth folks.  It cannot be swayed by political argument nor by appeals to authority.  All such attempts that fail the essential test of fundamental algebra must be challenged and exposed as unworkable.  Further, those who proposed such fundamentally-disprovable theorems must be called out; we must insist that they either repudiate their position, disprove what appears to be an irrefutable mathematical fact that their claims are unworkable, or admit the actual motivational factor that was behind their attempted sales job.

Sure.

Corruption and intentional, malicious abuse of the law "rarely" happens.

So we're told.  There are a "few" bad apples that are "routinely" outed and gotten rid of among the justice system.

Horse****.

The investigation, launched after the August shooting of Michael Brown, an unarmed black teenager, found that the department violated the Fourth Amendment in instances such as making traffic stops without reasonable suspicion and making arrests without probable cause.

The report provides direct evidence of racial bias among police officers and court workers, and details a criminal justice system that through the issuance of petty citations for infractions such as walking in the middle of the street, prioritizes generating revenue from fines over public safety.

Then, when you can't pay, those "cases" that were trumped up and not predicated on probable cause or suspicion are then escalated into criminal violations, turning what is a routine traffic ticket into a jail stay and permanent criminal record.

Also, African-American drivers were more than twice as likely to be searched during a traffic stop than white drivers, but that those black drivers were 26 percent less likely to be found to be holding contraband.

In other words they searched black people not because they were more-often in possession of contraband (that is, the suspicion objectively was reasonable, in that it led to the find of something unlawful) but rather because they were black.

When you are detained without cause it is not a detainment or arrest; it is kidnapping under the actual black-letter definition of the law, and when such is used to require you to pay money that is extortion.

Both are serious felonies carrying heavy prison terms.

Unless this is corrected, and not just prospectively but with those who have committed these offenses being tried, convicted and sentenced to prison, there is no rule of law remaining in this nation or any reason (other than fear of being shot) to abide the so-called "law" at all, since in reality it does not exist and the persons charged with enforcement of same are nothing other than gun-toting, felony-committing thugs.

If you think "I'm white, therefore it doesn't matter since it won't happen to me", you're flat-out wrong and might up dead wrong.  The fact of the matter is that this sort of rampant lawlessness and refusal to follow both the Constitution and Law are utterly common among law-enforcement and the covering up of such lawless behavior is damn near universal, which is itself a further felony.

The odds of this some day being turned on you might be small, but it certainly isn't zero and if you do not act now to stop it if and when it is turned against you it will be too late.

And yet, they still say you should take this crap.

Statin therapy appears to increase the risk for type 2 diabetes by 46%, even after adjustment for confounding factors, a large new population-based study concludes.

This suggests a higher risk for diabetes with statins in the general population than has previously been reported, which has been in the region of a 10% to 22% increased risk, report the researchers, led by Henna Cederberg, MD, PhD, from the University of Eastern Finland and Kuopio University Hospital, and colleagues, who published their study online March 4 in Diabetologia.

What's worse is they found a dose-dependent relationship, which is a strong confirming factor.

Folks, there is really not much worse in terms of chronic conditions than Type II diabetes.  Seriously.  Anything that causes it in my opinion ought to be treated as a flat-out metabolic poison, period.

Yet these clownfaces still persist in claiming that cardiovascular "risk" is reduced.  Well, maybe it is and maybe it isn't.  Maybe, if we looked at the actual morphology of cardiovascular events, we'd find something causative rather than correlative, but we might also find that there's no hundred-billion dollar annual market that can be "developed" as a consequence.

But this much I believe with all every fiber of my body: Anyone who claims that a "therapy" that causes diabetes is not actually doing harm has rocks in their head.

Never mind that cholesterol isn't only not bad for you, it's essential to life.

Yeah, I know, people are hung up on the LDL thing.  Well, first and foremost, the fact is that "LDL" in the standard cholesterol test, as I've pointed out, is not measured -- it's calculated using a formula that is not always accurate and is subject to confounding factors.  Worse, only one subtype of LDL is known to be dangerous and the standard three-panel test is non-specific for that sub-type of it.

It's your ass (and life) my friends -- do what you want.

But don't complain if, after having done so, you wind up with both your feet amputated and blind, followed by being forced on dialysis (all of which will make your doctor, pharmaceutical companies and hospitals very rich) before you die because that is the frequent path that Type II diabetics find themselves on.

Let me be clear just in case there's any question on my perspective: These drugs will never willingly enter my body and, if someone tries to force me to ingest them I will treat that act as attempted murder and respond appropriately.

The cracks in the dam have begun to show, and water is spurting from them.  Meanwhile, the ivory tower, gold-encrusted with the many millions of taxdebtor dollars (many forcibly extracted from impressionable young people via knowingly-false starry-eyed claims peddled to same) is beginning to sway as the foundation has been undermined -- and will soon come crashing down.

SWEET BRIAR — In an announcement that stunned students Tuesday, Sweet Briar College said it will close at the end of this academic year because of “insurmountable financial challenges” blamed on the dwindling number of women interested in single-sex education and the pressures on small, liberal arts schools.

The "insurmountable financial challenge" is charging young adults upward of $100,000 for four year degrees all-in when a liberal-arts education is, in most places, a recipe for a sub-$50,000 a year salary.

This, in a nation where tax burdens on such people in the "middle class" reaches 25-30% of one's base pay and is guaranteed to rise due to deficit spending and entitlement decisions that cannot possibly be paid on existing cash flow is utterly insane.

It was once the case that you could get a liberal arts degree for about $3,000 a year including books with no other mandatory costs.  That is, roughly $100/credit hour.  You could live off-campus as you decided but if you wanted to live on campus block-constructed dorms of modest expense were available, making the $5,000/year full-in college education, absent discretionary spending, quite possible.

This, in turn, could be worked for during summer vacation and a part-time, mostly weekend-hour job during the school year, making the proposition one of an entirely sunk cost.  Thus, if you only earned $40-50,000 a year after getting your degree you were still ok.

That is no longer possible and it is the intentional acts of the higher-education "industry" that have made it so, along with the idiotic bleating and advocacy for more loans on looser terms that have driven costs to the moon.

Undergraduate tuition is $34,935, and room and board costs $12,160. In 2013-14, 99 percent of undergraduates were awarded aid (a mix of grants/scholarships, loans and work-study) that averaged $18,914.

The full 4-year cost here is $200,000!  Even with "financial aid" the cost is still over $100,000 for four years, and what's worse is that in all probability half or more of that "aid" is loans, which means the graduate comes out of this school having sunk more than $100,000 into their so-called "education" while carrying back $50,000 more in debt!

This is utterly insane and indefensible.  It was indefensible a decade ago and it is today.  

Any school peddling such a system of so-called "education" is selling something has negative real value ex-costs, and they know it.

If you're a parent and assist, recommend or even sit silently while your kid applies to and goes to such a place you are either an idiot or worse, you are actively conspiring in destroying your now-grown child's economic future.

In short, you, along with the faculty and staff of any such institution, are monsters.

This was posted a while ago but it deserves a read -- and listen.

WASHINGTON — The F.B.I. director, James B. Comey, delivered an unusually candid speech on Thursday about the difficult relationship between the police and African-Americans, saying that officers who work in neighborhoods where blacks commit crimes at a high rate develop a cynicism that shades their attitudes about race.

Maybe.

Or maybe it's not just black people and cops.

Maybe it's the environment cops operate in today, where they can violate people's rights with impunity, even to the point of planting evidence on them and bragging about it on the Internet without going to prison.

“I have a method for getting people off the street that should not be there. Mouthy drivers, street lawyers, *******s and just anyone else trying to make my job difficult. Under my floor mat, I keep a small plastic dime baggie with Cocaine in residue. Since it’s just residue, if it is ever found during a search of my car like during an inspection, it’s easy enough to explain. It must have stuck to my foot while walking through San Castle. Anyways, no one’s going to question an empty baggie. The residue is the key because you can fully charge some ******* with possession of cocaine, heroin, or whatever just with the residue. How to get it done? “I asked Mr. DOE for his identification. And he pulled out his wallet, I observed a small plastic baggie fall out of his pocket…” You get the idea. easy, right? Best part is, those baggies can be found lots of places so you can always be ready. Don’t forget to wipe the baggie on the person’s skin after you arrest them because you want their DNA on the bag if they say you planted it or fight it in court.”

How is this guy still on the street?  If you think this is a "unique" or "uncommon" thing, no, it's not.  This very cop later admits it happens (probably) every day and that planting evidence and lying is "just part of the game."

What's even better is that this same cop claims the Sheriff supports this behavior and has for his entire career.

Just the other day I pointed out another, similar case -- this time in Louisiana, with quite-clear involvement of many law enforcement officers and attorneys.

Oh, and if you're a cop and try to put a stop to it?  You're threatened with "going home in a casket."

We can't have a civil society with this sort of thing going on anywhere in the country.  I don't care what your political leanings might be this sort of crap is straight out of Nazi Germany and everyone aware of or protecting it deserves to stand trial.

Wake up America -- before the next time you do it's behind bars or worse, you don't wake up at all.