The Jefferson Tree - A platform for debate and discussion of current events and politics...

Former NSA Chief Keith Alexander Quickly Becoming the Villain

Certain people, who had their egos (not national security) terribly hurt by the Edward Snowden revelations, continue to call Snowden names and stuff and show their outrage toward him for exposing the NSA’s wrongdoing.  It would seem, however, they might want to redirect their outrage toward another former employee of the NSA: ex-chief Keith Alexander. It was revealed yesterday the NSA is now being sued by a reporter for not disclosing Alexander’s financial records in the interest of making sure there ...

Palestine Borders and Demographics Prove to be A Ghetto

Thanks to a good idea given to me by my partner here at STL, I started to research and analyze some geographic information regarding the Jewish land-grab in Palestine. I then followed by studying some demographic info on the Gaza Strip and drew some interesting conclusions. Here’s what I found: First, some great maps over at Wikipedia with adjoining historical context info and links portraying the boundaries of Palestine/Israel since the 1916 Sykes-Picot Agreement (The linked information could have you reading ...

Social Protest Lit: Ebenezer Elliot, “The People’s Anthem”

A poem from Ebenezer Elliot entitled The People’s Anthem from Book IV called “Out of The Depths.” This chapter is focused on man’s pursuit of remedy for social injustice: When wilt thou save the people? O God of mercy! when? Not kings and lords, but nations! Flowers of the heart, O God, are they! Let them not pass, like weeds, away! Their heritage a sunless day! God save the people! Shall bring crime for ever, Strength aiding still the strong? Is it thy will, O Father? That man shall toil for wrong? “No!” ...

Stephen Moore’s Ridiculous Anti-Clean Energy Rant

Hard right-winger Stephen Moore took a break from pushing debunked trickle-down economic policies to take a pathetic shot at clean energy.  Let the stupid begin. …radical Greens, one of the most influential political forces in America today… Seriously?  He goes on to mention the famed Sierra Club as one of these forces.  And where did they rank in 2013 on lobbying: 755.  In fact, if we look at the top 50 interest groups giving to members of Congress this year, no sign ...

Anti-Israel Policies/Actions Is Not Anti-Semitsim

There have been growing protests in Europe against the mass murder of Palestinians in the Gaza Strip by the State of Israel. These actions are in response to the IDF killing 500 Muslims there with the vast majority of them being civilians. But what is troubling about these movements is, according to this article in the NYT, an anti-Semitic tinge has taken place at these protests. The story reads that in France: Several recent pro-Palestinian demonstrations in Paris have boiled over ...

Warren For President?

Today at the the annual Netroots Nation conference in Detroit, the nation’s largest gathering of liberal activists and organizers, Massachusetts Sen. Elizabeth Warren (D) reportedly drew an applause that Hillary could only dream of. According to NYT and Politico reports, Warren was a rock-star while Hillary Clinton, the likely Democratic candidate for President, was absent. Warren’s populist talking points and her history of taking Wall Street to task (remember that Warren was an early advocate for the creation of a new Consumer Financial ...

Social Protest Literatue at Sparking The Left

Here at STL we are starting a new feature. In between our political-insight posts, I will start publishing excerpts or entire pieces of great literature that speak to crucial social and political issues which span the centuries. Though almost all in the Western tradition, the subject matters are transcendental. Now first to name my source, I am taking pieces from Upton Sinclair’s selected and edited collection “The Cry for Justice: An Anthology of the Great Social Protest Literature of All Time.” ...

Pulitzer-Winning Journalist Detained for Being Undocumented

I was first brought aware of Jose Antonio Vargas’ story last week in a piece he penned in Politico. He explained that he was in the Rio Grande Valley, in the city of McAllen, just north of the Mexican border. He was there to see first hand the tens of thousands of undocumented children, most of them from Central America, and observe how they were being treated. The trip was also used for a news conference appearance and vigil organized by United We Dream, ...

Selective Outrage

War is hell.  All we have to do is look around the world to see its toll.  That being said, I don't understand the lack of outrage coming from this President and his administration other than that aimed at our one ally - Israel which is doing no more than trying to protect it's people from rocket fire and constant raids from Hamas. The fact that Palestinian civilians are getting killed is a tragic yet unavoidable aspect of this war.  Why ...

Why Are We So Full Of Hate?

What has happened to human kind?  No matter where you look we find ourselves surrounded by a world filled with hate. What puzzles me is how it's combined with political correctness.  Take this country where so many words are now frowned upon and even forbidden because they are hurtful to certain people.  Redskins, squaw, savage plus a whole lot applying to blacks, orientals and hispanics not to mention middle easterners.  Has it dawned on anyone banning the names has done nothing ...

Has Putin Over Reached Once Too Often?

My, oh my.  We've watched this man make mince meat of Obama over the past several years.  Each time you could see the smirk broaden and the swagger get more pronounced. He and his allies - Iran, China, Syria and North Korea were truly enjoying themselves. But as happens with a lot of bullies, they get over confident and suddenly everything around them collapses. I'm wondering if this is the case with the downing of the Malaysian passenger jet. With the death ...

If Only It WERE The Heat!

What a day.  A passenger plane has been shot down over Ukraine uncomfortably close to the Russian border. Hamas reneged on the humanitarian cease fire so Israel launched their ground offensive. Children still pour across the border while Congress dithers. It's now being reported parents are giving them birth control in case they are raped during the journey. Along that line former member of Congress, Todd Aiken, who once talked about legitimate rape and the idea that women's bodies protected them from becoming ...

Hannity's Histrionics

For a person who doesn't have much faith in the intellect of pundits, I wonder why I watch them so often.  I wonder even more why the cable outlets and networks that employ them don't take more care in who they hire. Many of them get on crusades that bear no resemblance to reality.  Sean Hannity is one of the most prominent. The night before last  he was on his Bowe Bergdahl kick demanding to know why he was returned to ...

Do Actions Speak Louder Than Words?

If the President could run away from the border mess any faster I'm sure he would. It's being said it's because being seen in the setting of kids crammed into confined spaces with their scabies and lice would reflect badly on him.  It could even be his Katrina.  Well, maybe.  But who's fault is that? It goes to show his handlers aren't as smart as they think they are.  For one, drinking beer and shooting pool in Colorado, a state where ...

The Kids Always Went Home

Watching the immigration mess going full bore brought to mind a lot of things that have involved children from other nations.  The first thing that comes to mind is the Disney song It's a Small World After All that speaks to all we have in common. Hopes, dreams, all the warm fuzzy stuff. We've had exchange student programs where a student from another country lives with a local family to learn not only academics but what life in American and Americans ...

The Militia Is Coming, The Militia Is Coming!

That's all we need! News has it a call has gone out for militia, both unarmed and armed, to gather along the border to help private land owners protect their property in something called Operation Save Our Borders.  Terrific! Remember how well it went when militia turned out to help to  help Cliven Bundy in his fight over Federal grazing rights in Nevada?  It came within a hair's breadth of turning violent. I really feel for the border towns who are the ...

To lay taxes to provide for the general welfare of the United States, that is to say, 'to lay taxes for the purpose of providing for the general welfare.' For the laying of taxes is the power, and the general welfare the purpose for which the power is to be exercised. They are not to lay taxes ad libitum for any purpose they please; but only to pay the debts or provide for the welfare of the Union. Thomas Jefferson
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Ralph Musgrave - Ralphanomics

Steve Keen’s debt jubilee idea.

Summary: I have plenty of respect for Steve Keen, but don’t agree with his debt jubilee idea. He argues that the process of paying off debts is deflationary, and that if we want to get the debt reduction process over quickly and return to normal levels of aggregate demand, we need stimulus with debtors being made to use the stimulus money they receive to pay down their debts.

Strikes me the bureaucracy involved there is a problem. But more fundamentally, it’s the PROCESS OF PAYING OFF DEBTS that is deflationary. Thus if debtors who seriously want to remain indebted are allowed to do so, there is no deflationary effect. As to debtors who WANT TO reduce their debts, they will do so AUTOMATICALLY given stimulus. Thus there is no need for any sort of special “debt forgiveness” scheme.

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There has been a big rise in private sector debt over the last decade or so. Paying off this debt will have a similarly big and long lasting deflationary effect. So Keen wants the “paying off” to be speeded up with a “debt forgiveness” program or “debt jubilee”.

The essence of his argument is under the heading “A Modern Jubilee”. In contrast, the paragraphs PRIOR to that heading contain the technicalities and evidence to back his argument. His argument, as I understand it, is essentially as follows.

The accumulation of private debts is an important contributor to aggregate demand (AD), and in particular the ACCELERATION in the growth of this debt is the vital factor.

I have no quarrel with that.

He then claims that the LEVEL of private debt accumulation over the last ten years or is unprecedented, and that paying it off will involve such a degree of AD reduction that the only solution is a debt jubilee.

Now that argument would be valid if the only source of AD or potential AD was debt accumulation. But it’s not: government and central bank can perfectly well make up for any lack of AD by boosting private and/or public spending.

Indeed, Keen’s proposal is to do EXACTLY the latter, but channel a portion of the extra money towards debt reduction. He says:

“A Modern Jubilee would create fiat money in the same way as with Quantitative Easing, but would direct that money to the bank accounts of the public with the requirement that the first use of this money would be to reduce debt. Debtors whose debt exceeded their injection would have their debt reduced but not eliminated, while at the other extreme, recipients with no debt would receive a cash injection into their deposit accounts.”

First, I’m not sure that QE alone would have the required stimulatory effect, because QE has a negligible effect on private sector net financial assets. But that is a minor quibble: it’s not of crucial relevance to the basic argument here.

So let’s just assume that stimulus is implemented, and the net effect is to channel money into everyone’s pockets (debtors, creditors, you name it).

Bureaucracy.
The first problem with requiring debtors to use their newly acquired stock of money (stimulus money) to pay off their debts is the ENORMOUS amount of bureaucracy involved.

For example, just assuming debtors are induced to write out checks to their creditors, what’s to stop those debtors (where they want to maintain their level of debt) quietly incurring a similar amount of debt from other creditors (or even re-financing via the SAME ORIGINAL CREDITOR/S a few months later)?

Stimulus plus jubilee equals stimulus.

The second problem is this. As far as ultimate effects go, there is very little difference between Keen’s idea and a straightforward dose of stimulus (SDS) WITHOUT any specific attempts to have debtors pay off their debts.

To illustrate this point, I’ve listed below the six changes that Keen claims would result from his jubilee idea. Plus I’ve put comments in orange below after each.

1. Debtors would have their debt level reduced;

Same applies to SDS to the extent that debtors think the best use they can make of a cash windfall is to pay off their debts. In contrast, to the extent that they see fit to MAINTAIN their level of debts (and assuming their creditors are happy with that) I see no good reason to pay off the debts.) Moreover, simply MAINTAINING a debt at a constant level does not have a deflationary effect: it’s the PAYING OFF of debts that has the deflationary effect. So if a set of debtors want to maintain their indebtedness, where is the harm?

2. Non-debtors would receive a cash injection.

Same goes for SDS.

3. The value of bank assets would remain constant, but the distribution would alter with debt-instruments declining in value and cash assets rising;

To the extent that debtors see fit to pay off their debts, exactly the same applies to SDS.

4. Bank income would fall, since debt is an income-earning asset for a bank while cash reserves are not;

Same again: to the extent that debtors see fit to pay off their debts, exactly the same applies to SDS.

5. The income flows to asset-backed securities would fall, since a substantial proportion of the debt backing such securities would be paid off;

Same again: to the extent that debtors see fit to pay off their debts, exactly the same applies to SDS.

6. Members of the public (both individuals and corporations) who owned asset-backed-securities would have increased cash holdings out of which they could spend in lieu of the income stream from ABS’s on which they were previously dependent.

Same again: to the extent that debtors see fit to pay off their debts, exactly the same applies to SDS.

 
Ralph Musgrave - Ralphanomics

Author: Ralph Musgrave - Ralphanomics

I wrote a book on unemployment recently with James Galbraith, and others. Galbraith is one of Obama's economic advisers. I love the different cultures that exist in this world. I took an interest in them long before the daft word 'multiculturalism' was widely used. I want to see these cultures preserved. I want to see Tibet staying Tibetan, and Britain staying British.

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