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Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

When satire leads, can reality be far behind?

“Are you concerned about growing income inequality in America? Are you resentful of all that wealth concentrated in the 1 percent? I’ve got the perfect solution, a modest proposal that involves just a small adjustment in the Federal Reserve’s easy monetary policy. Best of all, it will mean that none of us have to work for a living anymore. For several years now, the Fed has been making money available to the financial sector at near-zero interest rates. Big banks and hedge funds, among others, have taken this cheap money and invested it in securities with high yields. This type of profit-making, called the “carry trade,” has been enormously profitable for them. So why not let everyone participate?”

Sheila Bair, Washington Post.

The article gets even better from here.

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12 comments to When satire leads, can reality be far behind?

  • Alisa

    Saw it in the mail a couple of days ago, with a question attached: what is this kind of article (and lately similar ones) doing in the MSM? Is it that the more intelligent and moderate in the (mostly leftist) media are beginning to sense that they may just get what they were wishing for when they voted for Obama, only longer and harder? Or are they positioning themselves as “fair and balanced” for the upcoming battle for the public opinion?

  • When you borrow from a bank, you are paying interest on your own money.

  • Laird

    FYI, her name is Sheila Bair (no “L”).

  • Paul Marks

    Staghounds – if you already had money you would not need to borrow it.

    Still Staghounds makes a valuable point – as do the comments after Bair’s article.

    All the people pileing in and denoucing the rich and the corporations and……..

    A wonderful example of missing-the-point.

    It is the very act of credit-money expansion that is insane. Not who gets the money – as the satire was trying to show.

    Lending should be from REAL SAVINGS.

    And saying that credit-money expansion (creating money from nothing) is the same as saving or “is saving just as real as any other kind” (J.M. Keynes) is nonsense – total and absolute nonsense.

    Yet taught in virtually all schools and universities – and then pushed in teh media.

    Although S.B.s article shows that even in the Washington Post some people have doubts about it all.

    I am reminded of “compatiblism”.

    Agency is the capacity to make choices (that is what being an “agent” a “reasoning I” means).

    If an agent (a person – a being, a subject not a nonagent object) chooses to do evil rather than good they (we) are morally responsible for their (our) actions.

    That is what moral praiseworthyness or blameworthyness is about – that is what it means, that one could CHOOSE.

    Determinism is the doctrine that one does NOT choose. That actions are predetermined (by prior events) and that any idea of choice is an “illusion”.

    Two contrasting views.

    Yet use the magic word “compatible” and suddenly determinism and moral responsibilty (nonchoice and choice) are somehow on the same page – not in direct conflict.

    Total nonsense – yet most philosophers in most universities teach that determinism is “compatible” with moral responsbilty, and the students lap it up. Indeed they judge themselves greatly superior to those silly people who think there is a contradiction between believeing in determinism and also believeing in moral responsbilty.

    It has been “proved” that they are compatible – “proved” because the great philosphers have said they are compatible (arguement-from-authority……).

    Such it is with treating credit-money expansion as “savings” “just as real as any other form of savings”.

    Creating credit-money by book keeping tricks is not “savings” it has got bugger all to do with savings.

    Yet if people of authority say it is savings………

    And such folk control most schools, universities ….. and on and on.

    So we end up with people like Ambrose Evans-Prichard (of the conservative Daily Telegraph) denouncing the European Central Bank NOT for its credit-money bubble antics – but for not expanding the money supply ENOUGH.

    Not because he is an evil man (he is not), but because he has been educated all his life to see credit-money expansion (“monetary stimulus”) as legitimate.

    And this goes to his (and most other establishment types) view of banking itself.

    To them a banker is not someone who takes earned savings and lends them out.

    No – a banker (to the modern mind) is a wizard, who CREATES credit (via the magic spells of book keeping tricks) for “the good of the economy”.

    This is not a credit bubble – it is “the life blood of the economy”.

    And the role of governments (Central Banks and so on) is to push the banks to do this – on and on, for ever.

    And to support the banks whenever they get into trouble.

    It is not this-or-that detail that is wrong – it is the whole view of the economic world.

    The real world is based on work, producing an income, choosing to NOT consume some of this income – but, rather, to invest it (either directly – or by lending it to someone else for them to build factories and so on).

    The world the the elite sees is based on “demand”, on “consumption” and lending is not financed by thrift, hardwork and self denial (indeed those are bad things – which undermine the economy), but is financed by creidt-money espansion (in turn created by book keeping tricks – with direct government money creation whenever the credit bubble produced by those book keeping tricks looks like it is going to collapse).

    In one view of the economy human effort and human REASON are the main factors.

    In the other view of the economy magic spells (credit money expansion) and “animal spirits” are the main factors.

    One can not really have a converstation over this divide.

    As the two views of the economic world are so radically different.

    Tragically it is the insane view of the economic world that is in charge.

  • Jacob

    Every economist (even Paul Krugman, let alone Keynes) will concede that printing “too much” money is bad, that you can’t print infinite amounts of money. (Print money = expanding credit).
    They only maintain that printing is advisable “just now”.
    The funny thing is – they say “just now” always.

  • Ken

    Funny thing — I just attended a recent presentation by James K. Galbraith in which he named Ms. Bair as one of the few brave people in DC (of course, he rattled off Elizabeth Warren too…but one plants spinach, one gets spinach). Somehow I doubt this is what Dr. Galbraith had in mind.

  • Current

    This is the best bit: “Sheila Bair is a former chairman of the Federal Deposit Insurance Corp.”

  • Richard Thomas

    All fiat money is credit really. That we have been able to use it for going about our daily business for so long is something of a miracle of prestidigitation.

  • veryretired

    Just as bad money drives out good, so too do bad ideas, i.e., magical, unrealistic assertions that everything will be ok without too much painful effort or complex thought, drive out good ideas that are difficult and full of nasty math and other ishy things.

    Then, as always, reality lands in big heavy boots right on all those fragile, delicate, airy-fairy dreams, and difficult takes on a whole new meaning.

    I fear my children, and theirs, will be cleaning this mess up for a long, long time.

  • Paul Marks

    All good interesting comments (from Alisa’s comment right to veryretired’s comment).

    I was going to make extra points, but other folk have already done so (and in a much less long winded way than I would have).

  • Andrew Duffin

    An exciting proposal.

    If we can’t go all the way with a loan scheme like this in the UK, we could surely at least raise the minimum wage to £25 an hour.

    Think how much good that would do!

  • Rapa A.

    “I had somewhat more to say upon this part of the subject but the post is just going, which forces me in great haste to conclude, Sir,…” ( Jonathan Swift, “Mechanical operation of the spirit”)
    The tales, tales…