Thursday, 20 March 2014

Image of a crisis

Interest rates this low for this long means we have a long way to go.

Where next?  Nowhere is where next.

Screen Shot 2014-03-18 at 5.04.49 PM

Tuesday, 18 March 2014

Money is an IOU - next step revolution?

Good article looking at the role of money creation in the modern society.  The truth is out there.

The truth is out: money is just an IOU, and the banks are rolling in it [Guardian]

"Back in the 1930s, Henry Ford is supposed to have remarked that it was a good thing that most Americans didn't know how banking really works, because if they did, "there'd be a revolution before tomorrow morning".

Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called "Money Creation in the Modern Economy", co-authored by three economists from the Bank's Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window.

To get a sense of how radical the Bank's new position is, consider the conventional view, which continues to be the basis of all respectable debate on public policy. People put their money in banks. Banks then lend that money out at interest – either to consumers, or to entrepreneurs willing to invest it in some profitable enterprise. True, the fractional reserve system does allow banks to lend out considerably more than they hold in reserve, and true, if savings don't suffice, private banks can seek to borrow more from the central bank.

The central bank can print as much money as it wishes. But it is also careful not to print too much. In fact, we are often told this is why independent central banks exist in the first place. If governments could print money themselves, they would surely put out too much of it, and the resulting inflation would throw the economy into chaos. Institutions such as the Bank of England or US Federal Reserve were created to carefully regulate the money supply to prevent inflation. This is why they are forbidden to directly fund the government, say, by buying treasury bonds, but instead fund private economic activity that the government merely taxes."

So is the next logical step once the "people" work out how it really works is "revolution" in a Henry Ford sense?  We might find out sooner rather than later.

Worth reading this academic article.

Monday, 10 March 2014


"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered...I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

Thomas Jefferson

Saturday, 8 March 2014


"There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt." John Adams.

Friday, 7 March 2014

Bitcoin has theory and history on its side

A bit of Austrian economics for a Friday afternoon. Can anything stop bitcoin? Who is wearing no clothes? The central bankers or the bitcoin miners and buyers of very expensive code that disappears from hotwallets at a ferocious speed.

A good read in full.

 Bitcoin has theory and history on its side [Cobden]

The Bitcoin phenomenon has now reached the mainstream media where it met with a reception that ranged from sceptical to outright hostile. The recent volatility in the price of bitcoins and the issues surrounding Bitcoin-exchange Mt. Gox have led to additional negative publicity. In my view, Bitcoin as a monetary concept is potentially a work of genius, and even if Bitcoin were to fail in its present incarnation – a scenario that I cannot exclude but that I consider exceedingly unlikely – the concept itself is too powerful to be ignored or even suppressed in the long run. While scepticism towards anything so fundamentally new is maybe understandable, most of the tirades against Bitcoin as a form of money are ill-conceived, terribly confused, and frequently factually wrong. Central bankers of the world, be afraid, be very afraid!

Amusing "rubbish bitcoin users say" video

Over at conspiracy economics we have heard them ALL. Bargain prices or just weeks away from collapse?

Thursday, 6 March 2014

The face behind BitCoin

Newsweek article.

The Face Behind Bitcoin [Newsweek]

Satoshi Nakamoto stands at the end of his sunbaked driveway looking timorous. And annoyed.

He's wearing a rumpled T-shirt, old blue jeans and white gym socks, without shoes, like he has left the house in a hurry. His hair is unkempt, and he has the thousand-mile stare of someone who has gone weeks without sleep.

He stands not with defiance, but with the slackness of a person who has waged battle for a long time and now faces a grave loss.

Two police officers from the Temple City, Calif., sheriff's department flank him, looking puzzled. "So, what is it you want to ask this man about?" one of them asks me. "He thinks if he talks to you he's going to get into trouble."

"I don't think he's in any trouble," I say. "I would like to ask him about Bitcoin. This man is Satoshi Nakamoto."

"What?" The police officer balks. "This is the guy who created Bitcoin? It looks like he's living a pretty humble life."

Tuesday, 4 March 2014

Flexcoin - another Bitcoin theft

After the Mt.GOx fiasco comes the Flexcoin news that it is shutting its doors.

It is becoming impossible to trust any Bitcoin exchange and this will undermine the share price.

Bitcoin mining is environmentally insane when you think about it - huge amounts of electricity spent do generate a number that happens to be worth something........ madness.

Bitcoin Site Shuts Down After Being Robbed Of Every Single Coin It Held Online [Business Insider]

This time Flexcoin — which called itself a Bitcoin bank — has announced that it's going out of business after a huge theft that has wiped it clean.

This is the announcement. There's no sugarcoating it. Somehow all the Bitcoins were just taken.

Monday, 3 March 2014

Post crash economics reading list

Plenty of reading for the apocalyptic economist in you.

Post-crash economics: a reading list

Neoliberal economics isn't working and students are demanding more from their course reading than the 8th edition of Macroeconomics can provide. Following the news that Economics students in Manchester have formed the Post-Crash Economics Society and Aditya Chakrabortty's excoriating and controversial commentary on the state of contemporary economics, published in the Guardian this week, Verso presents a reading list of economics titles which challenge the mainstream neoliberal consensus and offer powerful alternative models in contemporary economics.

First on our list, and referenced by Chakrabortty, Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown by Philip Mirowski
Following the financial crisis, how have banks and the financial services industry manage to stay on top in the political stakes; indeed, how has their recovering led to an upturn in their fortunes? Philip Mirowski explores how financial capitalism has turned the crisis to their advantage, leveraging state power to prop up free market capitalism.

Another new release from Verso is Costas Lapavitsas' book on financialisation, Profiting Without Producing: How Finance Exploits Us All. Described as "a masterpiece on the financialized capitalism of our age", the book looks at the rise of financial profit as a key aspect of the economy, and the role of financialized capitalism in the current economic crisis.

Crisis in the Eurozone by Costas LapavitsasFollowing the banking crisis and the credit crunch, Lapavitsas charts the roots of the European crisis and offers a daring and controversial call to break up the Eurozone.

Meltdown: An End to the Age of Greed by Paul Mason
The current crisis is explored in gripping journalistic detail by Paul Mason in his first hand account of the collapse of the banks and the financial chaos that ensued.

The Making of Global Capitalism: The Political Economy of the American Empire by Leo Panitch and Sam Gindin
The construction of that system is the focus on Panitch and Gindin's groundbreaking comprehensive study of the link between the spread of capitalism and the growth of the United States' empire in the twentieth century.

The New Way of the World: On Neoliberal Society by Pierre Dardot and Christian Laval
What is new about neoliberalism?  Cutting through contemporary misunderstandings about its genesis and prevalence, Dardot and Laval distill neoliberalism to its core meaning and examine how it might be challenged on new political and intellectual terms.

Utopia or Bust: A Guide to the Present Crisis by Benjamin Kunkel
After the financial crash and the Great Recession, the media rediscovered Karl Marx, socialist theory, and the very idea that capitalism can be questioned.

Utopia or Bust offers an introduction to heterodox economics and contemporary Leftist thinkers, ranging from the revolutionary philosophy of Slavoj Žižek through to the economic analyses of David Graeber and David Harvey. Discussing the ongoing crisis of capitalism in light of ideas of full employment, debt forgiveness, and “fictitious capital,” Utopia or Bust is a tour through the world of economics Marxist thought.

Why It's Still Kicking Off Everywhere: The New Global Revolutions by Paul Mason"History is over," we were reliably informed after the fall of the USSR, "and capitalism has won". Talk of the end of ideologies was perhaps premature, as Paul Mason discusses in his examination of how networks, technological developments and economic crash combined to kick start a wave of global rebellions, from the Arab Spring to Occupy. 

A Companion to Marx's Capital and A Companion to Marx's Capital, Volume 2 by David Harvey
David Harvey has spent 40 years lecturing on Karl Marx's masterwork of political economy, Capital. In this series he presents a thorough and accessible companion to the great work, offering analysis and insight in his clear and engaigng style.

The Complete Works of Rosa Luxemburg, Volume 1: Economic Writings I
The first volume of Luxemburg's Complete Works, a major series from Verso, dedicated to her economic writings, examining the functionings of the capitalist system.

A History of Gold and Money: 1450-1920 by Pierre Vilar
Vilar's classic text, re-presented as part of Verso's World History Series, looks at the long game: the development of money and the growth of the economic system of capitalism, with relation to the exploration of the New World, colonialization, the collapse of feudalism and the birth of capitalism.

The Economics of Global Turbulence: The Advanced Capitalist Economies from Long Boom to Long Downturn, 1945-2005 by Robert BrennerA long view of capitalism's booms and bust in the second half of the twentieth century, The Economics of Global Turbulence received critical acclaim for its careful analysis of post-war development.

The Long Twentieth Century: Money, Power and the Origins of Our Times by Giovanni Arrighi
A masterpiece of modern sociology which offers an overview of the development of capitalism and how it has unfolded over a series of "long centuries", producing new global political powers in the process.
Adam Smith in Beijing: Lineages of the 21st Century by Giovanni ArrighiIn a radical rereading of the work of 18th century market theorist Adam Smith, Arrighi looks at how China has constructed an economic counterpower to challenge the dominance of the West.
Historical Capitalism with Capitalist Civilization by Immanuel WallersteinA short and highly-readable anatomy of the capitalist system by the renowned theorist of "world systems", which looks at how development in the West has required the emiseration and subjegation of the developing world.
The Origin of Capitalism: A Longer View by Ellen Meiksins Wood
Exploding the truism the capitalism is just a result of human nature, The Origin of Capitalism places the economic system within context, analysing its emergence as the result of very specific and localised historical conditions.

Land Grabbing: Journeys in the New Colonialism by Stefano LibertiHow is agrarian capitalism affecting the developing world? In his rigorous study Liberti examines the growth of a new colonialism through exploitative new property regimes.