Saturday, September 19, 2020

Federal Reserve Bank President Says Climbing Price Inflation is a 'High Class Problem'

Neel Kashkari

 As far as I am concerned all the monetary policy-making members of the Federal Reserve have no clue as to how the economy works and are at present conducting completely irresponsible money pumping.

But the most confused of the bunch has to be Minneapolis Fed President Neel Kashkari.

 MarketWatch reports that on Friday, Kashkari played down investor fears over runaway inflation, saying a spike in prices would be a “high-class problem” for the Fed.

Now, of course, once the Fed deems inflation to high the only way to battle it is to slow or eliminate money printing. This then brings on the bust phase of the Fed-created business cycle.

But to understand how unclear  Kashkari's thinking is on the matter, after saying high inflation was a high-class problem, in a speech he delivered to the Council of Institutional Investors, he said that the U.S. financial system is “absurd” because it has needed a central bank bailout twice in less than 20 years.

Of course, he fails to mention the role the Fed and the government had in these collapses. The first being the standard Fed-created boom-bust cycle and the second being the government decreed lockdowns.

Does Kaskari not understand this?

I just set him a copy of The Fed Flunks: My Speech at the New York Federal Reserve Bank and Austrian School Business Cycle Theory.


(ht Kenny Reed)

Time For A Mercy Killing At The Eccles Building

 The Eccles Building

By David Stockman

Thursday the Fed signaled that interest rates would stay near zero until 2024, but that was apparently not enough. As one money manager sotted with Monetary Cool-Aid bleated,

“The Fed said it would keep rates low for ages. But that’s not enough,” said James Athey, senior investment manager at Aberdeen Standard Investments. “Not taking away is no longer sufficient for this market. You need to do more, more, more.


The Fed did say that it would continue buying $120 billion of government and GSE paper per month for the indefinite future. That amounts to monetizing $1.44 trillion per year, meaning that in less than two years the Fed’s balance sheet will vault above the $10 trillion mark.

For want of doubt, that would essentially amount to $10 trillion of official financial fraud – 95% of which would have been accomplished since the turn of the century when the Fed’s balance sheet stood at just $500 billion after the first 86 years of its existence.

Likewise, how do you get “more” on the rate front when during the last 152 months (since February 2008) the Fed’s policy target rate (brown line) has been below the running inflation rate (purple line) in all except seven months. That means rates were negative in real terms 95% of the time.

And now they are pledging to tack onto that at least another 40 months of deeply negative real rates. That is to say, the geniuses in the Eccles Building are promising nearly 17 years running in which the Wall Street money market will function as a candy store for dealers, speculators and carry traders.

After all, the overnight and short-term money markets are not where operating businesses borrow to fund their working capital or where households borrow to finance the purchase of new autos, washing machines and trips to Disney World. Instead, that’s where Wall Street dealers fund their massive inventories of inflated stocks and bonds, speculators obtain repo funding of their asset books and options writers implicitly fund the carry cost of open positions.

Long ago Wall Street was transformed from an honest capital and money market into a giant gambling casino, but the prospective 17 straight years of negative real rates are now morphing it into a veritable devils workshop. Our lunatic central bankers apparently will not stop egging on the traders and speculators until the actually blow up the entire financial system.

Moreover, when we say negative real rates, we are not talking about marginalia, or money rates that are a few basis points under the inflation water-line. As is evident in the chart, we are already back to the extreme of January 2012, when the gap between CPI inflation (2.60%) and the effective Federal funds rate (0.08%) was –252 basis points.

Of course, that bit of insanity was justified as a once in one-hundred years expedient to kick-start an economy that had been mauled by the Great Recession. But here we are back at a real yield in the money markets of -250 basis points, meaning that the 12-year average real money market rate stands at negative -135 basis points, and will be extended at the level or even deeper for another three years.

Fed Funds Target Versus Trimmed Mean CPI, 2008-2020

The above chart is tantamount to a criminal indictment of today’s Keynesian central bankers. It means that savers are being savagely punished and expropriated, even as speculators skim massive dead-weight rents from the the securities markets. It amounts to a stupendous wealth transfer from the productive masses to the top 10% and 1% of households, which own 88% and 55% of these vastly inflated financial assets, respectively.

Of course, the lunatics domiciled in the Eccles Building pay no never mind to the chart above or to the capricious and destructive wealth transfer to the already rich which they intermediate. That’s because deeply embedded in their oppressive group-think is the erroneous presumption that “lower for longer” supports the main street economy, thereby fostering more growth and jobs than would otherwise happen on the free market left to its own devices .

As we show below, however, prolonged negative real money market rates manifestly do not engender enhanced economic performance on main street; the presumption that it does is just Keynesian catechism, not an empirically based truth.

So when central bankers appear to embrace a little froth on Wall Street in return for an upgrade to the main street economy, it involves no actual tradeoff at all. The “better economy” is just the imaginary product of ritual incantation in the Eccles Building, while the Wall Street “froth” actually amounts to massive, systematic and ultimately fatal inflation of financial asset prices that can only end in a destructive crackup boom.

One of the reasons today’s Keynesian central bankers fail to see the destructive folly of sustained negative real money market rates is that they are obsessed with inflation shortfalls from their arbitrary 2.00% target. That apparently blinds them to the absolute level of inflation and its relationship to money market rates that have been pegged close to the zero bound for more than a decade.

But the question, of course, is which is the greater danger? To wit, deeply negative money market rates, which will now be in place for nearly 17 years running, or modest shortfalls from a 2.00% inflation target, which the great Paul Volcker himself debunked as financial nonsense?

We have long argued that the 16% trimmed mean CPI is the best available trend measure of consumer inflation, and on this metric here is what you get: Namely, an average per annum increase of 1.93% since February 2008 per the chart above. Accordingly, for that meaningless 7 basis point shortfall from target, the Fed offered traders and speculators funding themselves in the money markets negative real interest rates that averaged -135 basis points over the last 12.5 years.

Moreover, that preposterous outcome remains true even if you use the Fed’s preferred sawed-off inflation measuring stick called the core PCE deflator. As shown below, for nearly the entire period since the financial crisis, the pegged money market rate has been well below the year-over-year trend of the core PCE deflator, as well.

In this case, the core PCE deflator rose by about 1.6% per annum, implying a 40 basis point shortfall from the 2.00% inflation target, but also resulted in an average negative real interest rate of -100 basis points over the period.

Folks, a 40 basis point shortfall on the shortest measuring stick in town is flat-out meaningless. But -100 basis points of after inflation carry is the very mother’s milk of rampant speculative excess on Wall Street.

Fed Funds Target Versus Core PCE Deflator, 2008-2020

The evidence is overwhelming that these massive gifts to Wall Street speculators imparted no economic goodness whatsoever to main street. Again, the best measure of peak-to-peak economic growth is real final sales because it removes the distorting effect of inventory fluctuations on the starting and end points of measurement.

On a cycle peak-to-peak basis, the per annum growth rate of real final sales has deteriorated steadily and sharply since 1953:

  • Four cycle average, Q2 1953-Q4 1973: 3.65%;
  • Four cycle average Q4 1973-Q1 2001: 3.29%;
  • Housing boom, Q1 2001-Q4 2007: 2.56%;
  • QE regime, Q4 2007-Q1 2020: 1.57%.

We find it remarkable that while the Fed’s money-pumping policies since 2008 have generated a trend economic growth rate equal to just 43% of the 1953-1973 average that the denizens of the Eccles Building have the gall to congratulate themselves on a job well done, and propose to double-down in the years just ahead.

Nor can there be any doubt that the far higher economic growth rates of the earlier periods shown above occurred notwithstanding significantly positive real money market rates for most of the 45-year high growth era before 2001.

Indeed, the chart below has the red line (Fed funds rate) and black line (PCE deflator) flipped upside down compared to the one above for 2008-2020. During the earlier 45-year period more than 90% of the time money market rates were positive in real terms, and often substantially so, averaging +200-400 basis points for much of the period after Volcker vanquished double-digit inflation in the early 1980s.

PCE Deflator Versus Fed Funds Rate, 1955-2000

Here’s the thing. JayPo and his merry band of money-printers have now decamped into an alternate universe.

They actually do believe that the Fed constitutes some kind of all-powerful monetary politburo; and that it possesses the tools to optimize the performance of an infinitely complex $20 trillion economy, which, in turn, ebbs and flows within the framework of an $85 trillion global GDP wherein product, labor, capital and money markets all around the planet are deeply interconnected by modern financial and communications technologies.

So we think they are smoking something. And that especially goes for Chairman Powell, who yesterday sounded like some latter day King Canute, commanding the waves of policy-imposed deflation and economic contraction now afflicting the US economy to retreat by the sound of his voice alone.

“This very strong forward guidance, very powerful forward guidance that we have announced today will provide strong support for the economy,” Chairman Jerome Powell told reporters. To drive the point home, he used the word “powerful” 10 times in the press conference.

Puleeze. Open mouth policy via “forward guidance” is the most hideous ploy yet in the Fed’s unending campaign to essentially destroy honest price discovery in the money and capital markets. It represents group-think gone off the deep-end.

The truth is, in today’s massive, intricately interconnected global economy, central banking in one country is an anachronism. The Fed’s purportedly sacred remit via the Humphrey-Hawkins inflation and unemployment targets are absolutely pointless because they can’t even be measured accurately, let alone delivered to the decimal point by Fed action.

That is to say, the U-3 unemployment rate is a joke in an hours and gigs based world where the price of labor and the quantities supplied in the domestic market are driven by the China Price for Goods, the India Price for Services, the Mexican Price for assemblies and the Pilates Studio Price for domestic services.

Likewise, the Fed’s vaunted PCE deflator is not even a fixed basket price index that measures the purchasing power of money over any reasonable period of time. It’s just an accounting device for the green eye-shades at the Commerce Department who are charged with confecting and calculating a dubious aggregate called the Real Gross Domestic Product.

There is only one way back to stable, sustainable capitalist prosperity, but there is not a snowball’s chance in the hot place that either candidate in the upcoming presidential election fiasco has a clue. That’s because the Wall Street gamblers and the Washington spenders alike prefer things just as they are – even if they are drifting toward the drink at an accelerating pace.

To wit, the plug needs to be pulled on the Fed’s macroeconomic management remit because it’s impossible to implement in today’s world and unnecessary, to boot. Capitalism will grow on the free market at whatever pace its collective participants desire, and the money and capital markets can price financial assets far more accurately and flexibly than the camarilla of 12 monetary central planners now sitting on the FOMC.

How can the above be accomplished?

  • Repeal Humphrey-Hawkins and all other macroeconomic targets and return the Fed to the modest role of functioning as a “bankers bank” as designed by the great Carter Glass way back in 1913;
  • Abolish the Open Market Committee and all forms of active meddling in the price discovery process in the money and capital markets;
  • Empower a small group of true green eye-shade technicians in the Eccles Building to lend to the banking system at a penalty spread above the open market interest rate against good collateral of short duration.

That would do it!

Read more of Stockman's analysis here.

David Stockman was Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street.

Friday, September 18, 2020

Top CFR Economist Warns Inflation Could Return Faster Than Federal Reserve Thinks

 Top Council on Foreign Relations economist Benn Steil and his associate Benjamin Della Rocca write:

[S]ince June, as QE continued to balloon the Fed’s balance sheet, bank excess reserves have turned sharply downward. In consequence...the gap between the Fed’s balance sheet and bank excess reserves, which had closely tracked inflation throughout the post-crisis era, has hit new highs. If this trend persists, inflation should head upward in tandem...

When, then, can we expect inflation to hit the Fed’s Holy Grail of 2 percent? Well, we know that when our balance-sheet-to-reserves gap measure began rising in 2010 it took eight months for inflation to rise one percentage point from the time it subsequently bottomed out. If inflation should rebound at the same pace now, we are looking at 2 percent Core PCE inflation, the Fed’s preferred measure, in February 2021.

The Federal Reserve on the other hand doesn't see price inflation at 2 percent until 2023.

My thinking, as outlined in the EPJ Daily Alert, is in line with that of Steil and Della Rocca.

The Fed is thinking at a remarkably shallow level that reflects a poor understanding of how price inflation develops. They are just projecting the trends in growth of price inflation in recent past years into the future.

Steil and Della Rocca point out, as I do, that newly Fed created funds are currently getting pushed into the system. This is different from the money pump following the September 2008 panic. At that time, much of the Fed money pump ended up as excess reserves, not this time.

There is enormous upward pressure on prices right now that will continue into the foreseeable future.

Hug your gold coins.


Condoleezza Rice Believes The United States is in 'Late Stage Capitalism'

Condoleezza Rice

Condoleezza Rice recently started in her role as director of the Hoover Institution.

It resulted in her being interviewed on the Hoover Institution show "Uncommon Knowledge with Peter Robinson."

You have to give Robinson credit, ever polite, he doesn't pull any punches---even when he is interviewing his top boss.

This is what he said at roughly the 5 minute and 30 second mark of the interview:

I really don't quite know how you're going to answer these questions

so slap me around if I'm asking bad questions or you know I had Milton Friedman on this

show and he treated me like a very slow graduate student. He said no that's not

of interest then he rewrote the questions before answering them. Feel free  to organize a question if that's the right way to put the way you're thinking about these

And after that cautious intro, he brilliantly asked her the BIG question:

You have talked about the challenges or the failures and there is this term you're using of "late stage capitalism." So of course I looked it up that up and it wasn't used by Marx but it is associated with the left and here's a definition that I found online:

"Late stage capitalism is a popular phrase that describes the hypocrisy and absurdities of capitalism as it digs its own grave now."

And then he had to soften it a bit, because she is his top boss, but he did ask the question and then went on:

Something tells me you don't really expect or want free markets to dig their own graves so how are you using this phrase?

And then Rice babbled some nonsense:

I'm using this phrase as a challenge to us all to be provocative in our thinking to be wide-ranging in our thinking about how we get at the core of anything that's ailing what i consider to be the greatest economic system that humankind has ever created. And that is the belief that if people are incented for their labor if they uh mobilize resources smartly and capital smartly uh everybody will be better off. I believe in free markets I believe in free enterprise I believe in the private sector uh I believe in small government uh to make sure that the private sector is freed to the degree that it can be to to do all of those things.

But,I recognize too that those who don't believe in that are making some very serious charges about where capitalism is failing and if we just say oh no no no you don't  understand we're actually growing the economy then people will say well what about all of those who've been left out and i'll tell you what happens uh peter when you're not provocative enough in your own thinking about your assumptions about what is right is you get lazy and if you get lazy you open the ground to those who would dig your grave and so my view is that  unless we have answers to these questions...we in fact are not doing our jobs as responsible stewards of uh the best economic system that humankind has ever uh created um you know i of course study.

So it appears, like so much of the business establishment, she is for free markets but leaves plenty of room for government to tinker. As for the use of the phrase "late stage capitalism," she then pointed out that Lenin liked the phrase and she said her using it has been controversial and so she might start saying "mature stage capitalism." 

But late or mature, it is difficult to understand how she comes to this point. I can certainly see the potential for a much more advanced form of capitalism with no cronyism, fewer regulations and no central bank.


Thursday, September 17, 2020

Twenty Six Weeks Like No Other

Aaron Sojourner notes that with the latest weekly new claims for unemployment coming in at 860,000, it makes twenty-six weeks of unemployment at levels never seen since the Bureau of Labor Statistics has been tracking the number since 1967.

As I have been pointing out, this is not a normal business cycle downturn. It is the result of lockdown madness. A lot of destruction has occurred.


Did you just bring up an economist?

I have a new favorite anti-Keynesian. -RW

'Why I'm Leaving California'

What Ben Shapiro says in this clip is on the minds of many CEOs and high-wage earners in Los Angeles, San Francisco, Chicago and New York City.

The tax base is leaving the cities thanks to the way wacko lefties running these operations.

Taxpayers will take a lot of abuse but when the threat is moved to directly outside the door despite paying high taxes, the tax base moves.

It is difficult to see how these cities don't turn into third rate hell holes unless the lefties running these cities are replaced pronto.

On a tangential note, it is interesting that Shapiro has chosen Tennesse. The real number crunchers tend to choose this state. The late financial adviser Harry Browne lived there and Arthur Laffer operates out of Tennessee.  Though Browne and Laffer chose Memphis over Nashville.


Riots May Cost Insurance Companies Up to $2 Billion But This Is What Is Even Worse....

The vandalism and looting following the death of George Floyd at the hands of the Minneapolis police will cost the insurance industry more than any other violent demonstrations in recent history, according to Axios.

 Property Claim Services has tracked insurance claims related to civil disorder since 1950. It classifies anything over $25 million in insured losses as a "catastrophe," and reports that the unrest this year (from May 26 to June 8) will cost the insurance industry far more than any prior one.

That number could be as much as $2 billion and possibly more, according to the Insurance Information Institute, which compiles information from PCS as well as other firms that report such statistics.

And you know what? The cost is almost nothing compared to the losses resulting from the lockdowns related to COVID-19, which is generally not a serious illness for people under 70.

Politicians are greater destroyers than street rioters.

They should be locked up and charged first.


Wednesday, September 16, 2020

Another EPJ Daily Alert Subscriber Problem

An EPJ Daily Alert subscriber emails:

Great call on the Switchback warrants! With the warrants up over 100% today, think it's best to take profits?

Keep up all the great work on the report. You should be charging at least double.

Actually, most EPJ Daily Alert subscribers bought much earlier in the year and have much bigger gains. This email came in today also:

I just got an alert that SBE.WS spiked to about a 300% return if I sold today. Do we hold on?

Please note: Past spectacular advice does not necessarily mean future spectacular advice. 


BREAKING: Federal Reserve Board Leaves Interest Rates Unchanged Near Zero

As expected, after it's two-day monetary policy meeting. the Federal Reserve Board has announced that it has decided to keep the target range for the federal funds rate at 0 to 1/4 percent.

From the Fed statement:

The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. Economic activity and employment have picked up in recent months but remain well below their levels at the beginning of the year. Weaker demand and significantly lower oil prices are holding down consumer price inflation. Overall financial conditions have improved in recent months, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency mortgage-backed securities at least at the current pace to sustain smooth market functioning and help foster accommodative financial conditions, thereby supporting the flow of credit to households and businesses.

Translation: The mad money printing shall continue.

Hug your gold coins.


How My Book On Modern Monetary Theory Got Linked To Hot Fast Young Girls

 Okay, this is a wild one.

As I have pointed out, my new book, Problems With Modern Monetary Theory: A Comment on Stephanie Kelton’s "The Deficit Myth" has been selling well.

But a really strange thing happens if you attempt to find the book by searching the title in the Amazon search engine. A few suggestions come up including the book but when you click on the link to the book, the link reads:

It is not all the links, just if you search in the above specific manner and apparently some have. The Pink, Live, Fast, Young Girls link has already garnered some comment on Facebook.

I was naturally not happy. Many will not understand how these links are created and that I must have been searching for Hot Fast Young Girls on Amazon and by error linked it to my book.

The fact is that to get the book published after I am satisfied with the book, I just hit a button that says, "Global Distribution" and that is it. It is then distributed to Amazon, Barnes & Noble, etc. I have no further part in it.

Amazon has plenty of roadblocks to get to a human that can actually help with this kind of problem but the Wenzel persistence has paid off.

Pretty much everyone at Amazon ignored my emails including Jeff Bezos (, Dave Clark - SVP Worldwide Operations ( and Jeffrey Helbling-top VP (

You would think one of these characters would forward my emBut Bezos does have his 

But I do pound away. And it appears that when I asked for comment from the Amazon PR department on how exactly a book on monetary theory and that I planned to write a story about it, I was linked to hot fast girls, that did the trick.

I received this morning:

Hello from,

My name is Angela, and I’m a member of the Executive Seller Relations Team. Our PR team received your email and requested that our team respond on his behalf.

I have reviewed ASIN 1716646383 and found that the issue with the URL was that this specific ASIN was first created by another Seller in 2015 with the Title of "Pink Live Fast Die Young Bad Girls Do It Well". In researching this further, the text is from a song by M.I.A. and the other Seller was selling a phone case with those words written in pink. The product is still listed for sale, although Currently Unavailable, on the marketplace:

I have already deleted the old contributions for ASIN 1716646383 that referenced this title. However, in order to have our system fully refresh, you will need to refresh the ASIN within your Inventory. This means you will need to go into your Manage Inventory page within Seller Central and locate this ASIN. Click 'Edit' from the right side of the page. Ensure that all information is correct and click 'Save & finish'.

This should refresh the listing so that the URL updates and no longer references the old Title.

Best regards,

Angela L. Executive Seller Relations

I am still not sure how these ASIN numbers got linked and the Hot Girls link is still up. But progress appears to be occurring. Now, I guess, I just have to alert my the distributor to get the inventory page refreshed.



The California exodus continues.

The Daily Wire, the conservative media company started by Ben Shapiro, Jeremy Boreing and Caleb Robinson, has announced plans to move its headquarters from Los Angeles to Nashville.

Boreing said that the move was being made due to a declining quality of life in the city, including high housing costs and homelessness.

The publisher’s 75 employees based in Los Angeles are being given until Oct. 1 to decide whether to make the move, Boreing said. He said that it looked like about 80% would make the move.

EPJ may not be far behind the Wire.

It probably won't be Nashville but California has become a nasty, ugly old broad.

Here is another indication of the direction people are headed in. It costs nothing to rent a U-Haul to drive to California but it is a small fortune to rent a U-Haul to exit California.

(Via Mark Perry)


Tuesday, September 15, 2020

Judy Shelton Does Not Have the Votes to Clear the Senate

News wire reports indicate that Senator John Thune states that Trump Fed nominee Judy Shelton, the occasional gold standard supporter, does not have the votes to clear the Senate.

It is not clear at this time how many votes she is short.

Keynesians have been working overtime to try and kill Senate support for her. They may have succeeded.


I Am Not a Fan of Stephanie Kelton's "The Deficit Myth" (Not Even the Footnotes)

From start to finish, it is extremely difficult to find anything positive to say about Stephanie Kelton's new book The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy. I mean not even in the footnotes and she seems particularly proud of  her footnotes:

I read the footnotes in her book. I even bought a key book referenced in the footnotes to see what all the excitement was about.

This is what I wrote in Problems With Modern Monetary Theory: A Comment on Stephanie Kelton’s "The Deficit Myth" about the most significant footnote in her book:
The prevalent thinking is that barter first took place and then indirect exchange, which resulted in the emergence of money. 
But this is not how Kelton sees it. Money was created by government as a means to tax individuals and there was no evolution from barter to indirect exchange (money)in her theory.  
Curiously, other than a footnote reference by Kelton pointing to claims that there wasn't much barter before indirect exchange emerged, she remarkably does not attempt to prove the essential MMT claim that taxation creates money. 
But her footnote reference is stunning; it leads off by listing the book Debt: The First 5,000 Years by David Graeber.
Graeber is an anthropologist and makes basic economic errors in his book that no economist would ever make. He misidentifies the name of the founder of the Austrian school of economics, referring to him as Karl instead of Carl Menger.
Karl was actually the son of Carl but it was Carl who was the economist and published several books on the subject. 
But more significantly, he writes that Menger, along with William Jevons, added to the idea that money developed after barter by stating that they only (emphasis added) “improved on the details of the story, most of all by adding various mathematical equations to demonstrate that a random assortment of people with random desires could, in theory, produce not only a single commodity to use as money but a uniform price system.”
But Menger never used equations in his discussion of the emergence of money, never mind as the core to his development of the theory of how barter and indirect exchange emerged. He, in fact, rejected the mathematical approach.
There are no equations used in his discussion of barter and indirect exchange at all in his books. There are no equations at all in his book Principles of Economics, where he discusses barter and indirect exchange or in his paper “The Origins of Money.”
Graeber just gets this completely wrong. 
Graeber also offers probably the best critique as to why there may be no substance to his claim that there was no barter. 
In his chapter, “The Myth of Barter,” he points out that the available evidence of indirect exchange early on exists because “Some of it is just the nature of the evidence: coins are preserved in archaeological record; credit arrangements are usually not.”
But if credit arrangements were usually not of record, just what are the chances of early stage records of barter? How and why would that be recorded?
That is, he argues there was no barter because there are no records of such but then comes pretty close to admitting that records were probably not kept at the time of barter.
On this weak Graeber reed, Kelton plows on. But do note that by her being unable to prove that money did not emerge from barter, she is creating greater technical problems for her theory down the road.
The Kelton problems don't stop with this footnote. My complete takedown can be ordered here.


Monday, September 14, 2020

This is How Bad the San Francisco Commercial Real Estate Market Is Right Now

Pinterest Inc. has announced that it has terminated a 490,000-square-foot lease signed just last year for a building in development at 88 Bluxome St. in San Francisco.

The office building was initially slated to open in 2022.

Get this. Pinterest had to make a one-time payment of $89.5 million to get out of the lease.

At the same time, Twitter has put up for sublease 104,850 square feet at its San Francisco headquarters complex.

"Our focus on prioritizing de-centralization has allowed us to flex our active leased spaces as needed," a Twitter spokesperson said.

Bottom line: High-tech firms have no idea what the post-COVID-19 workplace is going to look like.

You would think that if they can convince workers, who can be monitored efficiently, to work from home, it makes sense to allow those workers to stay at home and save on the cost of office rent.

This won't work for everyone. In New York, JPMorgan Chase has ordered its trading and sales staff to return to their offices by September 21.


ABSURD: Trump's Top China-Hating Trade Advisor Blames China for US Lockdown

President Trump's top trade adviser, Peter Navarro, appeared yesterday on Maria Bartiromo's Fox News show 'Sunday Morning Futures.'

He used the opportunity to blame China for the US lockdowns and resulting economic collapse.

It must be made clear. Regardless of how COVID-19 developed in China from a jump from bats to humans or a leak from a Wuhan lab or whatever,  how to deal with the virus in the US was fully a US operation.

Trump's early moves were a disaster. Democrats saw an opportunity with Trump scaring the hell out of people for what is basically a flu that is not a serious virus for almost all who are not elderly with comorbidities.

Trump started it with his early promotion of nutjob Anthony Fauci in his daily briefings.

Then when the Democrats started locking down the economy, Trump paid the unemployed $600 per week on top of state unemployment plus sending a check to most Americans for $1,200.

If Trump didn't make these payments which allowed many to sit home fat and happy watching Netflix, those in lockdown cities and states would have put enormous pressure on leaders to end the lockdowns.

Trump's shallow thinking caused the disaster. He is a street hustler par excellence but he is not a deep thinker with any basic principles surrounding liberty and free markets.

This is what caused the economic collapse (aided and abetted by Democrats taking advantage of his mistake.)


Sunday, September 13, 2020

Washington Post Economics Columnist Retires

Robert J. Samuelson, who has been an economics columnist for the Washington Post for decades, has announced his retirement.

This was published on Sunday:

Dear Readers,

It’s time to quit. Since coming to Washington in 1969 as a young reporter, I have written, by my crude calculation, about 2 million words, most of them columns for The Post, Newsweek and the National Journal. Some years ago, I promised myself that I wouldn’t overstay my welcome: I would not continue my column simply because I could. I’m almost 75. If I haven’t yet said what’s on my mind, I never will.

He was a bit humble in his goodbye, he also wrote: 

So far as I can tell, nothing that I have written has ever had the slightest effect on what actually happened.

I know for a fact that he was at least closely read by the Washington D.C. elite. Indeed, on more than one occasion, during discussions with former Treasury Secretary Robert Rubi, he pointed me to Samuelson columns that he thought were particularly insightful.