Category Archives: EconTheory

Weekly Spotted 2

Einige aufgefallene Dinge der letzten Zeit

Vollgeldinitiative und die Schweizer Verfassung von 1999

Der allerwichtigste Coup der jüngeren Schweizer Geschichte war die neue Bundesverfassung von 1999. Obwohl man sie ‘materiell’ nicht verändern wollte sind viele Dinge dann doch ‘komischerweise’ geändert worden. Ohne die neue Bundesverfassung wäre der UNO-Beitritt oder IWF-Beitritt z.B. nicht möglich gewesen. Geradezu legendär ist das einfache ‘Vergessen’ der Golddeckung in der neuen Bundesverfassung…

Aus aktuellem Anlass ein neuer Aspekt, welcher 1999 auch einfach ‘aus der Verfassung’ rausfiel. Der Tagi-Blog argumentiert, vor 1999 hätten wir bereits Vollgeld gehabt…

Die Massenüberwachung wird nun auch zur Einbruchsaufklärung benutzt

Was einmal für schwere Verbrechen und v.a. gegen brutalen Terror erreichtet wurde, wird jetzt praktischerweise auch niederschwelliger ausgenutzt. Es ist absehbar, dass ‘wir’ im nächten Jahrzehnt Stück für Stück uns dem Massenüberwachungsapparat bedienen werden für Verbrechensaufklärung, später Delikte und danach ‘gefährliche Meinungen‘ und mit Freude ins Panopticon einziehen…
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Behind Varoufakis – and the personal value of an economics curriculum

Paradigm change is knocking evermore louder on your door…

Some incredible quotes (may be slightly stylized)

  • “EU is built on myths”
  • “EU was never meant to be democratic – it is an American Project”
  • “Eurozone never designed to sustain a shock”
  • “Great Financial Crisis orchestrated by Wallstreet and the twin deficits of America [through surplus recycling]
  • “Syriza may have to forge alliances with the IMF-bastards”
  • “After any form of Greek default, capital controls need to be put in place in Portugal. Domino Effect follows in Italy and France. Germany will leave the Euro before and form some ‘northern Eurozone’. The ‘south’ will face stagflation and dire times
  • “Gigantic amounts of unused purchasing power in the EU” / “The crisis is a coordination fail – nobody invests out of fear”
  •  “Truth of capitalism not found in mathematical models”
  • “Don’t read [Keynes’] General Theory

About the self

  • “My biggest fear is that I get corrupted by the privileges of power”
  • “[The movie] Matrix is a (impressionistic) documentary of the world we live in”
  • “None of my political initiatives are founded on my academic / professional background in economics – but the titles allow me to talk to the IMF, etc.”
  • “Anybody who doesn’t speak the economic language simply isn’t heared by the high and mighty, the hedgefunds, the FED”
  • “Value of studying economics is to see through the lies just as studying the bible did centuries ago. However, I cannot recommend without bad moral feelings this curriculum to any of my beloved ones – the pain of obstructing oneself half of your life is not worth it – there are better books to read out there”
  • The [right-wing] economic departement of Sydney employed me, because not even they could read my models

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Labor Day Food for Thought: For who are we working for?

For a lot of people worldwide the labor day means a day off work. The perfect moment to reflect, for who we are actually working. Who is harvesting the value added of your work? Welcome to Neofeudalism.



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The “Demonetization of Gold” Agenda

The abolishment of the Dollar-Gold-Standard in 1973 is usually forgotten. Surprisingly even in economics it is not teached or discussed even though it provides a great example to economists about monetary policy, an economists role, and how important to the comma exact regressions are in reality (hint: less than you think). However, with the little which is provided now in historical archives of this incident we can already see the bottom line:

1. The US had a clear Agenda of demonetizing the gold. The goal in the longer run which they achieved was to get the Gold out of the monetary system. The reason is clear: Gold would have restricted the US empire to put the cost of its wars and expansion on the shoulders of others (especially the Europeans).

2. Central banks are not independent. All the above decisions were made in the oval office, i.e. the state not the FED. FED officials are supposed to serve a function. They are under constant political pressure and have to make compromises. Some crucial monetary variables are even fully out of their control like the decision of a gold standard or not or government debt management. In that case it doesn’t even matter how benevolent the FED is.

3. Reserve currency status is untouchable. Any theat to the reserve currency status and the enormous importance of the US banking (clearing) system is monitored with high attention. Foreign policy is used to maintain the status. A reserve currency allows the homeland to keep the peripheral dependent and always ‘linked’ to the center. Once you are dependent on dollars, you are at their will. In capitalism power expresses itself in and is reinforced by the monetary system as the appearence of money produces intended human behavior. Hint: In the current Ukrainian-Russian-USA conflict we see Putin exactly playing with the reserve currency status of the dollar as he knows how much it matters to the US while Western is not getting the full range of this.

My conclusion of this is as short as sad: Points 1-3 are all relevant to understand monetary economics. These facts have to be taken into account if economists want to really add value to public discussion (and if there are any, who feel that craving to actually understand the monetary phenomenon). Questions suddenly appear: Which is the White House’s agenda on the dollars position in the world today? To what extent does such an agenda influence todays monetary policy both at the FED and the White House? What are their instruments (IMF, DOJ, etc.)

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Rajan & Zingales about populism & (central) banking

Mark Roe quoted in Rajan & Zingales (2003). Presented without comment:

“The U.S. financial system on the eve of World War I was primarily a much fragmented banking system. As Roe (1994) argues, this fragmentation has historically been the result of a populist fear of large financial institutions. In part, this fear was motivated by political rivalry between states and the fear that, if unchecked, New York would control the rest of the country through its strong banks” (p. 3).

Rajan, R. G. & Zingales, L., (2003). Banks and Markets. The Changing Character of European Finance. Cambridge, Mass (NBER working paper series).

Roe, M. J., (1994). Strong Managers, Weak Owners: The Political Roots of American Corporate
Finance. Princeton University Press, Princeton.

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