Not So Innocent Frauds

A Review of J. K. Galbraith's book "The Economics of Innocent Fraud"

Reading this book by John Kenneth Galbraith is like hearing someone preaching to a choir. In this book about not so "innocent Frauds", Galbraith identifies pretty much most of the shibboleths of the 20th century and tags them as the frauds they were.

While some of the frauds he identifies were identified as frauds before he was born, even so the man deserves a lion's share of credit for the entire 20th century and he fought a rear guard action against those frauds when they were first offered up as "fine new clothe that only a fool can't see how valuable it is". He's actually kind to the Reagan Revolution. He calls what to me were diabolical and almost violent frauds. But by "innocent" Galbraith is referring to the fact that most of the believers in these frauds don't know they've been conned.

Definition of Innocent Fraud

"Most progenitors of innocent fraud are not deliberately in its service. They are unaware of how their views are shaped, how they are had. No clear legal question is involved. Response comes not from violation of law but from personal and social belief. There is no sense of guilt. More likely there is self approval."

Fixing our Banking System and Fixing infrastructure are tied

From: http://infrastructurewithoutdebt.org/

The following Youtube article explains the distinction between "Greenbacks" and "Federal Reserve Notes" fairly clearly. One is money notes issued through the privateering banking system. The other are notes issued without interest. What we did during the Civil War points to a way forward for our country.

http://www.youtube.com/watch?v=3P9VsX_o8C4&sns=fb

More on this later

http://stonehavencommons.com/about-us/

Related to: http://www.thetwofacesofmoney.com/files/money.pdf/p>

A Progressive Agenda Gets the Snooze Treatment

I consider myself someone who pays attention. Yet somehow poor Bill De Blazio and Al Sharpton managed to get their efforts to create a common agenda knocked off the radar pretty thoroughly. The cynical media, punditry, and others -- all hit the snooze button on his "Progressive Agenda." That's all the shame. It was missing some of the elements that are needed for a common plank. But it was a good effort and it all needed to be taken seriously. Anyway this is the agenda (Reformatted a bit) from their website. The reporters who covered De Blasio's announcement didn't even bother to report the actual agenda in most of the reports:

1     Lift the Floor for Working People

1. Raise the federal minimum wage, so that it reaches $15/hour, while indexing it to inflation.
2. Reform the National Labor Relations Act, to enhance workers’ right to organize and rebuild the middle class.
3. Pass comprehensive immigration reform to grow the economy and protect against exploitation of low-wage workers.
4. Oppose trade deals that hand more power to corporations at the expense of American jobs, workers’ rights, and the environment.
5. Invest in schools, not jails-- and give a second chance to those coming home from prison.

2     Support Working Families

6. Pass national paid sick leave.
7. Pass national paid family leave.
8. Make Pre-K, after-school programs and childcare universal.
9. Expand the Earned Income Tax Credit and protect and expand Social Security.
10. Allow students to refinance student loan debt to take advantage of lower interest rates, and support debt-free college.

3     Tax Fairness

11. Close the carried interest loophole.
12. End tax breaks for companies that ship jobs overseas.
13. Implement the “Buffett Rule” so millionaires pay their fair share.
14. Close the CEO tax loophole that allows corporations to take advantage of “performance pay” write-offs.

This agenda is close to the "Common Agenda" I was proposing at the end of last year. It's a shame it didn't catch on. It's also similar to Bernie's 12 point plan (or 11 points). What is missing (Ironically since Al Sharpton was part of it's creation) is a specific nod to Black Lives Matter, and the urgent need for banking reform and Infrastructure investment - which are tied issues (more to come).

https://progressiveagenda.us/agenda

Huffington Post Article with Al's great speech (I loved it):

http://www.huffingtonpost.com/rev-al-sharpton/a-progressive-agenda-must_b_7307672.html

My previous post on Bill De Blasio:

http://holtesthoughts.blogspot.com/2014/12/time-for-christmas-truce.html

Previously I'd posted on what we needed for Infrastructure. But it turns out that currency reform and infrastructure reform are related issues. I'll be coming back to that -- but this is the previous post:

http://holtesthoughts.blogspot.com/2014/12/how-to-rebuild-our-infrastructure.html

Related Posts:

http://holtesthoughts.blogspot.com/2015/09/why-social-programs-are-investment-and.html

http://holtesthoughts.blogspot.com/2015/07/in-order-for-all-lives-to-matter-black.html

http://holtesthoughts.blogspot.com/2015/06/the-common-plank.html

The End of Normal - Galbraith and a way forward

The book "The End of Normal" expresses part of James Galbraith's efforts to lay out his macroeconomic ideas clearly. He's building on the work of his father and of other Post Keynesians, to lay out a new way forward. The standard review of the book says:

"The years since the Great Crisis of 2008 have seen slow growth, high unemployment, falling home values, chronic deficits, a deepening disaster in Europe—and a stale argument between two false solutions, “austerity” on one side and “stimulus” on the other."[B&N]

Benjamin Franklin and Paper Money

Benjamin Franklin and Paper Money

Benjamin Franklin vigorously defended the right of the colonies to issue their own script but he never seems to have told Parliament, as Gary North Alleges the following may be apocryphal;

"In the Colonies, we issue our own paper money. It is called Colonial Scrip. We issue it to pay the government's approved expenses and charities. We make sure it is issued in proper proportions to make the goods pass easily from the producers to the consumers. . . . In this manner, creating ourselves our own paper money, we control its purchasing power and we have no interest to pay to no one. You see, a legitimate government can both spend and lend money into circulation, while banks can only lend significant amounts of their promissory bank notes, for they can neither give away nor spend but a tiny fraction of the money the people need. Thus, when your bankers here in England place money in circulation, there is always a debt principal to be returned and usury to be paid. The result is that you have always too little credit in circulation to give the workers full employment. You do not have too many workers, you have too little money in circulation, and that which circulates, all bears the endless burden of unpayable debt and usury. [Web of Debt, pp. 40-41]" [http://www.garynorth.com/public/6882.cfm]

A Case of Putting words in someone's mouth

North is probably right about the apocryphal nature of the quote, but what Franklin did say was about the reasons reasons for rebellion was that they owed:

"To a concurrence of causes: the restraints lately laid on their trade, by which the bringing of foreign gold and silver into the Colonies was prevented; the prohibition of making paper money among themselves, and then demanding a new and heavy tax by stamps; taking away, at the same time, trials by juries, and refusing to receive and hear their humble petitions." [bartleby]

In other words, the colonies were in rebellion because Parliament at the behest of the Bank of England and other Tory forces were seeking to starve the colonies of money. And Franklin says as much:

"The Stamp Act says we shall have no commerce, make no exchange of property with each other, neither purchase nor grant, nor recover debts; we shall neither marry nor make our wills, unless we pay such and such sums; and thus it is intended to extort our money from us or ruin us by the consequence of refusing to pay it." [bartleby]

Franklin Was Defying Parliament

Bad Banking can turn a loyal country into a disloyal one. This Gary North alleges that Franklin would never have defied Parliament's prohibition on printing money. But Franklin did exactly that:

"Q. Do you think the assemblies have a right to levy money on the subject there to grant to the Crown?"

"A. I certainly think so; they have always done it."

"Q. Are they acquainted with the Declaration of Rights? And do they know that, by that Statute, money is not to be raised on the subject but by consent of Parliament?"

"A. They are very well acquainted with it."

"Q. How, then, can they think they have a right to levy money for the Crown or for any other than local purposes?"

"A. They understand that clause to relate to subjects only within the realm; that no money can be levied on them for the Crown but by consent of Parliament. The Colonies are not supposed to be within the realm; they have assemblies of their own, which are their parliaments, and they are, in that respect, in the same situation with Ireland. When money is to be raised for the Crown upon the subject in Ireland, or in the Colonies, the consent is given in the Parliament of Ireland or in the assemblies of the Colonies. They think the Parliament of Great Britain can not properly give that consent till it has representatives from America, for the Petition of Right expressly says it is to be by common consent in Parliament, and the people of America have no representatives in Parliament to make a part of that common consent."

[bartleby]

Franklin was outraged about the efforts to restrict the currency of the colonies. He might have said what Ellen Brown puts in his mouth, maybe in private. He might have actually said this to Parliament, but it didn't get into the published version. Even so she's filling in between the lines where there is no record. This outrages Gary North because he's a staunch defender of the modern privateering banking system and so any anachronisms from before we had reserve banking and extensive use of paper money raise his hackles. What Ellen Brown does is a kind of Exegesis that is probably only appropriate with mythical and legendary figures. But the longer words in what Franklin actually said say it much more clearly than the apocryphal quotes.

Franklin returned to the colonies after the Stamp act was repealed. And when later the colonies rebelled successfully, he was reviled as the "evil genius" of the American Revolution. This is true, except for the evil part. If Parliament had listened to him the USA would have remained a loyal colony. But he also touched nearly every one of the more capable leaders of the revolution. Including ones who were children when it started.

Between Paper money and the Postal System he was Postmaster of, he birthed the two major unifying forces of this country. A common currency and a networked Post Office.

Franklin on Money

This guy Gary North, claims that the famous franklin quote is bogus [http://www.garynorth.com/public/6882.cfm]

But Franklin's speech to Parliament refutes any idea that Franklin accepted Parliament's authority to prohibit paper money:

http://www.bartleby.com/268/8/10.html

The Web Pages that have North's panties in a bunch:

http://www.webofdebt.com/articles/dollar-deception.php

https://21stcenturycicero.wordpress.com/fraud/how-benjamin-franklin-made-new-england-prosperous/

Taxation: Ability to Pay, Fee or taxing Privilege?

Review of the article "Edwin R.A. Seligman and the Beginnings of the U.S. Income Tax Ajay Mehrotra

The notion that taxation should be based on "ability to pay" is a bedrock of progressive principles. We owe our notions of "progressive taxation" to early economists like Edwin R.A. Seligman (1861-1939) who advanced the theory and popularized this notion. He pushed progressive taxation over more conservative and regressive principles:

Taxes as a duty versus solely as a payment for Benefits.

Taxes should be proportionate to the "faculty" or ability to pay of taxpayers.

Taxation as a duty of Citizenship

Progressive taxation is based on humanist, progressive, liberal and commonwealth notions. It pushes back against selfish (conservative) notions that

1. those who benefit from a thing should pay for it.

2. No one should pay for another person's benefits.

3. A person earns whatever he gains, however he gains.

4. The exception is the poor, who never deserve to keep what they earn.

5. Taxation is the government stealing from the privileged.

6. Taxation should be a "fee for service," and no more.

Sadly Progressive notions of taxation are gradually being shoved aside and replaced with the older and regressive notion that reformers like Seligman were pushing against. taxation should be like a fee for service, based on "benefits received". This notion that taxes should be paid to pay for the benefits we receive from government, as parsed by modern (anti) reformers, tends to favor the wealthy and connected over labor and what is left of the middle class. It's return provides a theoretical tool that is degrading the middle class and subjugating labor -- because "benefits" theory essentially says "if you can't pay you can't benefit." From the debit side of taxation benefits theory thus seems a justification for oppression.

Convergence of Benefits and Faculty Theory

However, when one factors in the fact that most of the "benefits" that are the basis for "benefits" theory are a common heritage and the less explicit fact that much of such benefits are based on privatized government privileges or even usurped properties, then the choice between "benefits theory and ability to pay is revealed as a false choice; The money privilege, land privilege, private ownership of nature's bounty, commodification of labor, and corporate privilege, etc... are all privileges associate with either duties to provide a public benefit or the duty to pay for those privileges. Thus the notion of taxes being on "benefits received", especially unearned benefits, is also part of progressive taxation. Privilege is a grant of temporary ownership so that property can be turned into public goods. Taxing unearned privilege thus is is not only based on "ability to pay" but is also the stick required to ensure that those given privilege do the duties associated with grants of privilege from the rest of us; that they either do a duty or pay a duty.

Tory (or Privateering) Economics

The Innocent Fraud Dogma of the Phillips Curve Versus Reality

The economics of the Federal Reserve is backwards and has been since it's creation. Probably everyone working there knows this. But they still use the rhetoric of controlling inflation to justify interest rate rises and falls. They think that raising interest rates will prevent bubble economies to this very day. The Wall Street Journal Reports:

"Janet Yellen Expects Interest Rate Increase This Year"

Somehow it is important to her to control the economy by raising the interest rates charged banks. Somehow the whole world thinks that the way to prosperity and economic survival is:

"Fed chief says ‘gradual pace of tightening’ expected to follow first rate hike." [Yellen]

But she repeats the old chestnut anyway. It's now dogma:

"Central to the argument she set out to establish is a belief that slack in the economy has diminished to a point where inflation pressures should start to gradually build in the coming years. Ms. Yellen argued those pressures aren’t asserting themselves yet, because a strong dollar and falling oil and import prices are placing temporary downward pressure on consumer prices. As those headwinds diminish, she predicted, inflation will gradually rise." [Yellen]

But raising interest rates doesn't control inflation. Interest is what drives inflation!