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Who: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2016
Port: Lake Pleasant, AZ
20 May 2017 | Pago Pago, American Samoa
17 May 2017 | Pago Pago, American Samoa
17 May 2017 | Pago Pago, American Samoa
17 May 2017 | Pago Pago, American Samoa
11 May 2017 | Pago Pago, American Samoa
08 May 2017 | Pago Pago, American Samoa
08 May 2017 | Pago Pago, American Samoa
08 May 2017 | Pago Pago, American Samoa
08 May 2017 | Pago Pago, American Samoa
22 April 2017 | Pago Pago, American Samoa
22 April 2017 | Pago Pago, American Samoa
22 April 2017 | Pago Pago, American Samoa
11 March 2017 | Pago Pago, American Samoa
11 March 2017 | Pago Pago, American Samoa
11 March 2017 | Pago Pago, American Samoa
11 March 2017 | Pago Pago, American Samoa
11 March 2017 | Pago Pago, American Samoa
11 March 2017 | Pago Pago, American Samoa
11 March 2017 | Pago Pago, American Samoa

Putin and Russia Are Enemies of the US

20 May 2017 | Pago Pago, American Samoa
Kimball Corson
While Trump acts as though he is a Russian agent and, worse, claims Russia is our friend, the truth is Russia is and long has been our enemy. Trump has long and deep ties to Russia, laundered Russian mob money and the Russian government.

Putin's behavior continues to prove Russia is our enemy. He is against us in Syria. He uses mis-information and dis-information, at which he is a master, against us and our democratic efforts whenever and wherever he can. He has journalists, dissidents and opponents murdered regularly. Indeed, several Russians have recently have been murdered who had connections to Trump or his campaign. At every turn, Putin seeks assets and agents in the US to report back on us from high in our government. He interferes with and undermines us whenever and wherever he can. He is an old school KGB "dirty tricks" master and for years engaged personally in torturing many. Russian democracy is a joke.

Only fools can believe Russia, with Putin running things as a dictator, is our friend.

The Economics of Elinor Ostrom Criticized

17 May 2017 | Pago Pago, American Samoa
Kimball Corson
The idea that an economy can get its resources allocated optimally by people’s altruism and cooperation, is, as economists contend, truly naive and unrealistic, given the human condition, notwithstanding this woman's suggestion to the contrary.

The commons has been gone for hundreds of years and there are clear reasons for it. Cooperation is usually the function of government, because that is more efficient on a larger scale than private cooperation, and altruism is largely the purpose of charity and has less impact by far.

Finally, like far too many these days, this woman confuses rational self interest with greedy selfishness. They are not the same. One is reasonable and to be expected. The other reflects one of many personality disorders.

I can't see a Nobel Prize for the analysis that a commons or anything like it can possibly be run cooperatively. A jointly owned water well perhaps, but not a commons. It is a dreamers scenario that is also too close to the birth of good government.

The tragedy of the commons was not that it was overused, so much as that it was fenced off and taken by the few and politically powerful. The world's greatest heist. No real focus on that by Ostrom. It was the birth of big corruption in government.

A Road Map to Macroeconomics al al Keynes

17 May 2017 | Pago Pago, American Samoa
Kimball Corson
1) Keynes and Money: A Man Obsessed PBS

http://www.pbs.org/newshour/rundown/keynes-and-money-a-man-obsessed/#.WRJvqeUalbo.facebook

2) On Keynes and Keynesianism

http://www.sailblogs.com/member/thewanderer/422342

3) A Basic and Simplified Exposition of Keynes' General Theory

http://www.sailblogs.com/member/thewanderer/420872.

4) Some Differences Between Friedman and Keynes

https://www.facebook.com/kimball.corson/posts/1895963093762985?hc_location=ufi

5) Friedman Then vs Me Now or
A Critique of Friedman on Government Spending

https://www.facebook.com/kimball.corson/posts/1895863087106319

6) Hoarding and Capitalism

https://www.facebook.com/kimball.corson/posts/1897959610230000

7) One Key Keynesian Policy Prescription

https://www.facebook.com/kimball.corson/posts/1895563853802909

17 May 2017 | Pago Pago, American Samoa
Kimball Corson
I had a conservative friend ask me the other day "Well, how you can tell, when you hear two conflicting economic propositions, which [if either] is true." I answered --

1) with a good and detailed economic analysis (if one has the training, time and knowhow to do that),

2) with consideration of the relevant and available historical data on point and the relevant economic literature, and

3) with consideration of the relevant statistical and econometric work published on point (or done yourself, if you can).

Propaganda never survives these tests, but it is easily generated and time consuming to address and refute, as the industry generating it for the money paid them well knows.

Most people are not adequately equipped to tell the difference between propaganda and truth and that is why the industry is so successful. Look at America divided on economic matters, but real economists are not that much differing mostly on best methods.

With years of study and experience, or by following those with such backgrounds or often just by applying good intelligence with sufficient background, propaganda can be spotted in an instant.

FEE.Org: The Birth of Libertarianism as Political Propaganda in the US

12 May 2017 | Pago Pago, American Samoa
Kimball Corson
“Libertarianism” was a deliberate and planned propaganda project of the corporate lobbying world, launched as a pro big business “ideology” in 1946 by The US Chamber of Commerce and the National Association of Manufacturers. FEE was the resulting organization. It was a pure propaganda pitch by the lobbying industry for big business.

The Foundation for Economic Education (or FEE) is the one of the oldest libertarian think tanks in the United States. It was founded in 1946 by an American economist, Henry Hazlitt, who was influenced by the Austrian school, by Leonard Read of the Los Angeles Chamber of Commerce, and by David Goodrich of B.F. Goodrich. Leonard Read headed FEE until his 1983 death. The Austrian school of economics is well out of the mainstream of American economics and much criticized.

The FEE’s board also included the future founder of the John Birch Society, Robert Welch. The John Birch Society's funding board member was Fred Koch, the father of the Koch brothers, Charles and David, who have been substantial direct and indirect financial contributors to FEE. The FEE board also included the most powerful figure in the Mormon church at that time, J Reuben Clark, a frothing racist and anti-Semite after whom BYU named its law school; and, lastly, United Fruit director, Herb Cornuelle.

According to Congressional hearings on illegal lobbying activities, '46 was also the year that Milton Friedman and his U Chicago cohort George Stigler arranged an under-the-table deal with a Washington lobbying front man to pump out covert pro business and free market propaganda for the nationwide real estate lobby in exchange for a hefty payout, the terms of which were never meant to be released to the public.The whole arrangement came to light during the Buchanan Committee hearings on illegal lobbying activities in 1950. But notwithstanding such illegal lobbying, the public Friedman went on to become and remains a poster boy for FEE.

This was the organization formed by business and lobbying interests that foisted Libertarianism as political propaganda on to the American political scene.

On Keynes and Keynesianism

11 May 2017 | Pago Pago, American Samoa
Kimball Corson
There is no doubt that Lord John Maynard Keynes is the most useful, seminal and powerful economic thinker of the last two centuries. His book, The General Theory of Employment, Interest and Money -- usually referred to as The General Theory -- sealed that assessment. His theory of managing aggregate demand has been adopted in over 140 countries of the world and there is a whole industry of international economic counseling firms helping those countries to apply it. Of course, Politicians don't always listen, but they want to hear.

The success of Keynesian economics is so resounding that almost all capitalist governments around the world have adopted its policies, even China. And the result seems to be nothing less than the extinction of the economic depressions in the US. Before World War II, eight U.S. recessions worsened into depressions (as happened in 1807, 1837, 1873, 1882, 1893, 1920, 1933, and 1937). Since World War II, under Keynesian policies, there have been eleven recessions (1945-46, 1949, 1953, 1958, 1960-61, 1970, 1973-75, 1980-83, 1990-92, 2000-01, 2008- 10) and not one has turned into a depression.

Conservatives rail against Keynesian economics because, based on ideology, they doctrinairely oppose any government intervention in the economy. However, this is a position not even Milton Friedman adopted. He agreed intervention by the FED was necessary to stabilize the economy and avoid depressions. As he put it, "In some ways we are all Keynesians now." However, conservatives have never mounted a successful argument against Keynesian economics except to baldly or without accurate support simply declare it has failed, which has to be the greatest intellectual fraud of the century. Not even Friedman had good grounds to argue against intervention when it suited him.

Unfortunately, The General Theory is difficult to read. It is not very well written and it requires a rather high level of economic knowledge and sophistication to understand it. Many economists today simply don't understand it well and what is taught in many universities as Keynesian economics is simply a bad characterization of Keynes' thinking, often using the interest rate as the equilibrating variable when we all know it isn't. It is erroneously simplified in graphs.

A good simplification to start learning about Keynes' General Theory can be found here, but it is much to simple a view of Keynes to do more that get a beginner without training started. http://www.sailblogs.com/member/thewanderer/420872. I will do a series of essays on Keynesian economics, beginning with this one, so more can come to understand it and why conservatives oppose it so.

Trump on Being President

08 May 2017 | Pago Pago, American Samoa
Kimball Corson
"I loved my previous life, I loved my previous life. I had so many things going," Trump said in an interview with Reuters. "I actually, this is more work than my previous life. I thought it would be easier."

He later added, "I do miss my old life. This -- I like to work. But this is actually more work."

Trump did NOT say, as the WaPo clearly implies, "I was not ready to be president." That was WaPo gloss and bad journalism. What Trump said and the truth here are separate matters, . . ., pretty much as usual.

Our Truly Bad Leaders

08 May 2017 | Pago Pago, American Samoa
Kimball Corson
There was a day in America -- specifically, before Reagan -- when bad, evil and greedy men had to act covertly and put on a different public face. That is no longer true. Now they appear as they are and without pretense. Congressmen McConnell and Ryan come to mind first here. Although they are charged with protecting and acting in the public interest, they brazenly act contrary to it all the time, and in the interests of the wealthy. And for that they are deemed and made leaders of congress and recognized as such.

They make no bones about their willingness to injure the public in favor those who pay their way. They plow ahead with their doings. They are corrupt and bought, yet hold high public office. They are proud of themselves and unabashed that they are properly viewed as corrupt and evil men. A judgment at large that they cannot escape. It is reflected often in their own facial expressions. Ryan, in twisted anxiousness. McConnell, in bland, wide-eyed indignation.

But to be sure these are evil men without pretense of being anything else. All they care about is their legislative goals and successes. They feel no remorse or need to apologize, the hallmarks of decent men. They are doers of dirt.

We can only hope that America can survive its political system until it comes to its senses.

Our Huge National Blind Spot

08 May 2017 | Pago Pago, American Samoa
Kimball Corson
The Univ. of Chicago, my alma mater, has a huge blind spot. So do the economics departments and the law schools of our other great universities. It is that the economic bottom half of the US population does not exist. Although it comprises the majority of Americans, that economic bottom half is studiously ignored and all in these quarters pretend it does not exist. That is a huge number to ignore especially with a plight as bad as theirs.

They were abandoned by the democratic party decades ago, to the lasting injury of the party and that constituency. See, Revolt of the Elites and the Betrayal of Democracy" by Christopher Lasch. However, now there is a developing serious leakage around the edges on the blight of the bottom half plus. It started with Charles Murray's "Coming Apart: The State of White America, 1960-2010." Murray was and is not university affiliated when he wrote that book. Whatever his failings in deducing causations, and they are many, no one can deny how astute an observer Murray is of all he surveys."Coming Apart" has now been followed by "White Trash: The 400-Year Untold History of Class in America" by Nancy Isenberg of Louisiana State University. Murray is also followed by "The Vanishing Middle Class: Prejudice and Power in a Dual Economy," by Peter Temin, Professor Emeritus of Economics at MIT. Safely retired, Temin draws a portrait of the new reality in America in a way that is frighteningly and indelibly clear: America is not one country anymore. It has become two countries, each with vastly different resources, expectations, and fates.

But why are we just now coming to learn all this and why aren't any realistic solutions proposed? The second question answers the first. No one like problems without proposed solutions And there is no solution to the second question anyone is willing to discuss. Ergo, the silence we have had. But there is an answer.

From his experiences with and observations from the Great Depression and from his boyhood summers spent at the Delano family homestead with livestock, FDR had pretty well concluded that some sort of program of eugenics was needed in the United States, but before he could voice those sentiments, WWII descended on us and the world then learned to its horror about Hitler's human breeding program. With that, all discussion and thinking about eugenics in the US stopped dead in its tracks. However, the Scandinavian countries have long had the practice of buying the fertility of those who too much burden the social system.

Indeed the upper one third of America practices a form of eugenics by selective breeding from having men and women of the same intelligence and social station attend the same top universities from which they graduate and intermarry. It is the bottom half that breeds thoughtlessly, indiscriminately and far too frequently.

So that while the couple that graduated from say Stanford pursue separate careers and have only one child, a counterpart welfare mother in the bottom half has eight children by as many men and is generating many social problems and expenses. Flip the situation a single generation and we have an eight to one ratio of "disadvantaged" adults. Flip it two, and assume the same proportions, and the ratio of "disadvantaged" adults becomes 32 to one. And that is only over about 50 years.This is what has been happening while we have been ignoring this problem for so long.

A eugenics program can be sensible and voluntary. It can purchase fertility voluntarily in exchange for say a lifetime basic income. The alternative cost to the government might be nearly as great initially but much worse if the problem is ignored and flipped a generation or two. There are many alternative programs that can be developed and aspects to consider.

We have to recover our senses here or we could well have an insurrection or even a halting civil war. Heroin and alcohol can only ease the pain for so long. So before dismissing this suggestion out of hand, do read "White Trash" and "Coming Apart" first and then think about the matter open mindedly.
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The Death Knell of Conservative Thinking

08 May 2017 | Pago Pago, American Samoa
Kimball Corson
The cornerstones of conservatism are 1) reducing taxes on the rich will result in more economic growth and the resulting prosperity will trickle down to the middle and lower classes. By now, we know this is wrong, But conservatives still believe it. In fact, reducing such taxes a) only increases income inequality b) does not result in more growth and c) the benefits of the cuts all pour, if not trickle, up, not down.

The second cornerstone of conservatism is 2) big government is bad because it is wasteful of tax dollars, inefficient and it impairs freedom. This is also now shown to be quite wrong. The truth is, as the data now show, countries (and even states and provinces) with proportionally larger government sectors tend to have a) greater prosperity, b) more personal freedom and c) higher indicators of education, health, and personal safety." Continuing.

The bulwark of conservatism is crushed by these facts, but facts that conservatives, as is their want, all ignore. The core truth of these matters, in light of these facts, is simple: conservatives are greedy and don’t want to pay taxes that help all.

Turning to 1) reducing taxes on the rich, does not increase growth and national prosperity. A new study from the Congressional Research Service, "Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945,” shows that, from the last six decades of data, changes in the top marginal tax rates "have had little association with saving, investment, or productivity growth."

That is, cutting taxes on the rich does not lead to economic growth and prosperity. Other studies have shown almost as much. What it leads to is greater income inequality. The rich hoard the extra cash and no increased consumption or investment results.The study specifically found “that reductions of capital gains taxes and top marginal rate taxes have led to greater income inequality” for that reason. This destroys the first core principle of conservatives. Cutting taxes does not increase national income or growth and only worsens inequality.

Turning to 2) we learn first, that the stock ploy of conservatives is to show some aspect of some government program is wasteful or inefficient and then to argue all of government is wasteful or inefficient. This is patent nonsense, of course. Medicare’s overhead compared to private insurers’ overhead alone makes the contrary case. From the argument government is wasteful or inefficient, conservatives leap to the further mistaken conclusion that government must be reduced in size and function, . . . not that any waste be eliminated or any inefficiency deal with, but eliminated by greater reductions in the scope and size of government.

If the conservative argument to here has become thread bare, it gets worse. A new study by Edwin G. Dolan, a PhD in economics from Yale University, entitled “They Go Together: Freedom, Prosperity, and Big Government,” Dolan proves that the data do not support the notion that a larger government is detrimental to either freedom or prosperity. On the contrary, countries (and, I suggest, states and provinces) with proportionally larger government sectors tend to have more personal freedom, greater prosperity and higher indicators of education, health, and personal safety than other countries.

A sizeable part of Dr. Dolan’s study works with and shows that the Economic and Personal Freedom Indices developed by the Fraser and CATO Institutes, respectively, and the Legatum Prosperity Index of that institute -- all available for all of the 143 countries studied -- are all higher in those countries with proportionally larger central governments. Big government correlates with greater prosperity and both more economic and personal freedom. So much for the conservative mantra we should chop government down so small, we can then drown the rest of it in the bathtub.

That is, personal freedom, economic freedom and prosperity are all greater in countries with proportionally larger governments, not the smaller governments conservatives contend we should have. Indeed, the conservative core arguments have at this point become patently false and plainly counter factual and ideological. Yet, we still read them all the time, like hearing the chirpings of songbirds, from the right wing press and media as well as conservatives on Facebook and elsewhere. I could name names. But hey, in this post truth era, real facts don’t matter, right? It is all what you believe and can get away with that matters, no?

Continuing, Logan finds personal freedom and economic freedom are positively associated with each other, and that both freedom indices are positively associated with prosperity as measured by real GDP per capita. But he recognizes that prosperity includes more than just per capital GDP, so he uses the Legatum Prosperity Index which also strongly considers education, health, and personal security. Again, they correlate positively with big government. For the size of government, Dr. Logan uses the ratio of total government expenditures to GDP. The required data here are available for all countries in his sample of 143 countries from the IMF World Economic Outlook database.

From his statistical work with these databases, Dr. Logan concludes:

1. First, the data support notion that economic freedom makes a positive contribution to personal freedom and prosperity. That holds true whether we measure prosperity in a narrowly economic sense, as GDP per capita, or in a broader sense, using non-economic indicators of education, health, and personal safety.

2. Second, the data do not support the notion that a larger government is detrimental to either freedom or prosperity. On the contrary, countries with larger government sectors tend to have more personal freedom, prosperity and higher indicators of education, health, and personal safety.

Of course, conservatives will refuse to hear any of this, but the truth will out in the long run, leaving them to change the subject and scramble for higher ground, running naked in the wind. Trickle down has already become a joke.

The Twin Evils of Economic Inequality

22 April 2017 | Pago Pago, American Samoa
Kimball Corson
There are two types of excessive economic inequality: the inequality of income, a flow measurement of current doings, and the inequality of wealth, a stock measurement, including of hoarding. They are analogous to an income statement and balance sheet for an individual.

Excessive income inequality damages the economy in two ways. It reduces aggregate demand and income, and it injures the welfare of consumers in the economy who must go without much income and purchases for the rich to hoard their excess income to drive up stock and bond prices with it..

Excessive wealth inequality, in turn, injures competition and corrupts the national body politic of the country. I will explain more, but first consider how excessive our income and wealth inequality are.

As to income inequality, the top 1 percent receives 22.5% of all income, while the share of the bottom 90 percent is now below 50% for the first time ever. The top 10 percent receive just over 50% of all national income.

This is a radical change for the post war era and now there is clearly excessive income inequality. But this was not always so.

From about 1944 until the early 1970’s, the share of the top 1 percent was about 11.3% and the share of income of the bottom 90 percent was about 67.5%, levels that would remained more or less constant for three decades and posed no particularly serious problem. The top 10 percent received 32.5% of all income before the early 1970’s
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This rise in income inequality from the early 1970’s has occurred at the same time unions have essentially collapsed, as a countervailing power to corporate monopsony, and the marginal productivity pricing of labor has been abandoned by corporate America in favor of political appropriation of all of labor’s future productivity gains since about 1973 to profits and increased management compensation.

The problem of excessive and growing income inequality is it injures the economy and the welfare of the overall population. Many have less income than they need and would spend, and very few others have most of the income and cannot spend it all, hoarding it in cash and very inflated secondary financial markets. The circular flow of expenditure and income is atrophied by the amount hoarded which translates into reduced aggregate demand.

A more equal distribution of income would increase expenditure and income, augment aggregate demand, improve the economy and benefit the welfare of the overall population. These effects are well established but most economists dare not write about these matters because doing so will result in the loss of personal and general research funds and therefore income. The funding oligarchy disapproves.

Now, the distribution of wealth in the US is even worse. The wealthiest 10 percent own 76% of all wealth in the country. The next 40 percent own 23% of the wealth so that only 1% of all wealth is left for the bottom 50 percent of the population

The drastic rise in wealth inequality has occurred for the similar reasons as income inequality; namely, the trend of making all taxes less progressive since the 1970s, and a changing labor market where real wages have become stagnant due to the reallocated productivity gains of labor to profit and management. Stagnant wage growth makes it difficult for middle and lower class workers to save and accrue wealth particularly in a low interest rate environment.

The problem of excessive wealth inequality, which is hugely greater than most Americans realize, is it destroys competition and corrupts the body politic, injuring the political economy. Mergers funded by and for the wealthy have eliminated much competition in most industries and destroyed innovation which is at an all time ebb now. along with labor mobility up the ranks. Wealth is also used to create barriers to entry and reduce competition. Regulators are captured by industry wealth. They are wined, dined and taken care of on the side.. The antitrust laws were retired at the behest of great wealth and mega campaign contributions.

As Robert Solow, an MIT Nobel Laureate economist, explains ‘Piketty has identified the mechanism by which wealth inequality accelerates over time. But the consequences of that distribution are not merely economic but political: A concentration of wealth leads to a concentration of power, which in turn protects that concentration of power, both economic and political. That our political system is incapable of tempering Piketty's dynamic is not a bizarre coincidence but a direct result of that.'

Solow adds, "We are politically unable to preserve even an estate tax with real bite. If we could, that would be a reasonable place to start, not to mention a more steeply progressive income tax that did not favor income from capital as the current system does. But the built-in tendency for the top to outpace everyone else will not yield to minor patches."

Excessive income and wealth inequality are increasingly injuring our economy and our nation. And we are unable to do anything about it for the reasons Solow describes. Money prevails to block reform.

Why Trump is a Potential Disaster for the Economy

22 April 2017 | Pago Pago, American Samoa
Kimball Corson
Trump wants to hugely cut government spending (except of course for defense), an agenda republicans applaud. Of course, as usual, they all overlook that expenditure today is income tomorrow. That oversight is a republican trademark. So what we are saying is that Trump wants to hugely cut private incomes.

But he is going to cut taxes on the rich, too. Now, republican lore and classical economics tell us that will increase private spending and investing, but that is false. As the new Keynesians have shown, cutting taxes on the rich, with such great income inequality, simply causes them to hoard more, not spend more. They already have more money than they can or want to spend, so giving them more isn't going to fix that. They will not spend or invest more. So much for that expenditure source. So no real gain there.

But cutting taxes on the rich will increase the deficit, which increases expenditures, except that Trump also wants to cut that deficit, like most republicans, but that too will reduce government spending and private incomes. It shrinks the economy, other things equal. And our economic growth already is not nearly what it could be. Trump has already clobbered tourism to the US, a multi-billion dollar industry, and foreign student applications to US colleges are down in the range of 40 percent. Trump is an income wrecking ball on wheels.

But then Trump has great spending plans, but they are going nowhere. The Mexican Wall has suffered a quiet death, as illegal border crossings have dropped sharply toward zero and our Homeland Security secretary explains the wall is not needed and a dead issue. So much for that source of expenditure.

But then there is Trump's $1 tillion dollar infrastructure program of planned expenditure. First, that has taken a backseat to bombing Syria and threatening North Korea, at least for now. But secondly, good luck on getting a $1 trillion dollars out of a republican congress for anything. They will go along with Trump on cutting expenditures, but they cut him off on any new expenditure of note. They are still chafing over Obamacare and its big taxes and expenditures still being in place. Forget infrastructure.

So where does this leave us going forward? If we do go forward, the prospect is for a seriously slowed and damaged economy and reduced employment. This boom cycle is already very long in the tooth and Trump would well break it and throw us into a recession, if he does what he says he will and doesn't, what he can't.

There is little sunshine down the road, unless Trump abandons his plans and plays his dog and pony show war games and listens to Kushner and Cohen on how to live in an economic stall mode and divert attention elsewhere.

A Basic and Simplified Exposition of Keynes' General Theory

22 April 2017 | Pago Pago, American Samoa
Kimball Corson
Keynesian theory sought to explain the Great Depression. I explain his thoughts most simply here. Even Keynes' critics call him the greatest and most influential economist of the 20th century. For this reason, he is known as "the father of modern economics."

When the Great Depression hit worldwide, economists were called upon to explain it and devise a cure. Most couldn't. Keynes, however, could and explained economic slumps very simply.

Keynes said in a normal economy, there is a high level of employment, and everyone is spending their income as usual, mostly on consumption but some was saved and, through financial intermediaries, all their savings were invested in real productive capacity. All people's expenditure became all people's income. That is how the economy worked and grew.

There is a circular flow of money in the economy, all people's spending on consumption and real investment becomes all people's income in the next period. Say's law was said to apply. But what happens if consumer confidence in the economy is shaken and decreases, said Keynes. There are many possible reasons this might occur, but we need not discuss them here. Worried, people save more money in anticipation of future hardship than can be invested in productive capacity at the time. But this soon reduces people's income. The decisions of everyone to hoard more money than is usual and can be invested, reduces everyone's income next period. As people's incomes fall they then hoard even more. And so a vicious circle emerges: people hoard money in difficult times, but times become more difficult when people hoard more money.

The cure for this, Keynes said, was for the central bank to act so as to expand the money supply. By putting more money in people's hands, consumer confidence would return, people would spend more, and the full circular flow of money could be reestablished. But this was too simple for most policy makers who did not then understand it, but came to later.

But did this cure for recessions work for depressions? Keynes said no. Liquidity preferences become so great in depressions that no matter how much money within reason is shoved into their hands people will hoard all the additional money and not spend it -- that is, liquidity preferences were so high, they had fallen into a "liquidity trap." A liquidity trap is when people hoard money and refuse to spend no matter how much the government tries to expand the money supply. In these dire circumstances, Keynes believed that the government should do what people were not, namely spend the the amount of money they were hoarding. Keynes called this "priming the pump" of the economy, a final and governmental effort to re-establish the circular flow of money in the economy.

Keynes' advice on ending the Great Depression to President Roosevelt was rejected. Roosevelt tried countless other approaches, all of which failed. Most economists agree that World War II cured the Great Depression because the U.S. finally began massive public spending as Keynes called for, in this instance, on defense. Wars are an economic boon and a counter to slumps in part because governments always resort to Keynesian spending during them. Of course, such spending need not be directed only towards war -- social programs are much more preferable. But republicans fight the change.

In seven short years, under massive Keynesian spending, the U.S. went from the greatest depression it has ever known to the greatest economic boom it has ever known. The success of Keynesian economics was so resounding that almost all capitalist governments around the world have adopted its policies, even China. And the result seems to be nothing less than the extinction of the economic depressions in the US. Before World War II, eight U.S. recessions worsened into depressions (as happened in 1807, 1837, 1873, 1882, 1893, 1920, 1933, and 1937). Since World War II, under Keynesian policies, there have been eleven recessions (1945-46, 1949, 1953, 1958, 1960-61, 1970, 1973-75, 1980-83, 1990-92, 2000-01, 2008- 10) and not one has turned into a depression.

The success of Keynesian economics is such that even Milton Friedman once declared, " In some ways, we are all Keynesians now."

A Theory of Faux News

11 March 2017 | Pago Pago, American Samoa
Kimball Corson
All news stories are necessarily abridgments. Some facts are included and others and related stories are left out. The nominal rationale is life is short and their are other things to do. But is that true, in a meaningful sense. Since not all facts and all stories can be covered in full, the business of the news is really to leave the reader or viewer with an impression of current events, occurrences, people and people's thinking.

Faux news arises when those impressions are made deliberately wrong and false, and do not present the true picture and impression in a particular and significant regard. For example, the ad for the island below reads,

"Your very own island in the South Pacific, with beautiful trees on the property. A full one half an acre when the tide is right."

Except for reference to trees when arguably there is only one, the ad is technically correct, but as the pictures makes clear, the impression created by the ad is almost totally false.

The same sort of thing happens when the MSM sets out with one or more news stories to create an impression of events, occurrences, people or the thinking of others, within or across those several stories. It is technically almost all correct, but because of the false impression it intentionally creates, it is simply fake news.

To read the MSM -- watch CNN, for example, you could not believe 44% of the people think Trump is doing a good job. No way, I suggest. The impression created by the MSM is not more than 10% could think that. Why? Because a false impression to the contrary is created by the MSM that is fake news. And opposition establishment supporters simply do not get it or the 44 % would be much higher. Invective and hostility blind them, and the MSM caters to both sentiments because it sells papers better that way and that is what their news bosses tell them to do to increase sales and serve the establishment.

Some people of course hugely discount and don't believe the MSM -- which has the lowest credibility rating ever just now -- for just this reason, and that accounts for the 44%, instead of the MSM likely expected 10% or lower. False impressions are created and left by the MSM not radically dissimilar to the island ad I posited. But many are not taken in by them and filter the news to ignore the spin and slant. They resist false news for various reasons.

More in support of my contention the MSM is doing a truly lousy job on the whole.

The Liberal Establishment Does Not Get It

11 March 2017 | Pago Pago, American Samoa
Kimball Corson
Trump is a reaction to the liberal establishment's failure to address and sell out on --

1) Main Street's and Middle America' s concerns about growing income and wealth inequality, as jobs went overseas and now are being somewhat displaced by robotics,

2) America's economic instability with Wall Street and the Fed at the helm of our economic ship of state,

3) the Fed's failures to contain and avoid creating economic booms that later become busts,

4) the economic decline of the bottom half of Americans and the loss of the middle classes wealth in the form of homes,

5) our badly compromised civil rights, coupled with the militarization of our police forces and their coordination with our national military,

6) the financial corruption of congress and our representatives,

7) the commercial corruption, monitization and buy, buy, buy hype of the the American public scene and way of life,

8) healthcare and healthcare insurance prices rising too much too fast, and

9) the decline of public education and higher education, as a path for economic improvement, being priced out of sight

Most of all, 10) on top of this mess, we have the bloat and ineffectiveness of the liberal and republican federal government that does not address, much less correct these matters. Indeed, Obama did not come close or even have policies targeting or addressing these issues. Many issues got much worse under his tenure.

Britexit was a parallel reaction to similar concerns in Great Britain.

Our present lean toward Russia is a hedge on the prospective hegemony of China and its implications.

Only radical change can fix these matters and the liberal establishment and the republican guard oppose radical change because both profit from the status quo. And distressingly enough, only Trump and Sanders offer hope for radical change. That is our situation in a nutshell.
Vessel Name: Altaira
Vessel Make/Model: A Fair Weather Mariner 39 is a fast (PHRF 132), heavily ballasted (43%), high-aspect (6:1), stiff, comfortable, offshore performance cruiser by Bob Perry that goes to wind well (30 deg w/ good headway) and is also good up and down the Beaufort scale.
Hailing Port: Lake Pleasant, AZ
Crew: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2016
About:
Kimball Corson: I am a 75 year old solo sailor, by choice. However, I did take on a personable, but high maintenance female kitten, now a full grown cat, named KiKiPoo when she is sweet, or KatKatPo after she has just killed something like a bird or bat. [...]
Extra:
Although I was a lawyer and practiced law with good success for thirty years, creating significant new law, I never really believed in the law, the politics of law or in the over reaching self-interest of most lawyers I met. Too much exposure to Nietzsche and other good and seriously thoughtful [...]
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Who: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2016
Port: Lake Pleasant, AZ