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from Asad Zaman Ideology and Science are diametrically opposed to each other. An ideology is a set of beliefs that is maintained even in face of strong empirical evidence to the contrary. Science is primarily concerned with explaining the empirical evidence. Theories which conflict with observations are rejected.  This does not mean that ideology is necessarily wrong or bad – we must maintain our belief in justice, morality, honesty, trust, integrity without any empirical evidence;...

from Maria Alejandra Madi In the post-war boom era of 1945 to 1971, the U.S. surplus was at the center of the global economic order. Throughout the Bretton Woods period, the United States recycled part of its surplus via foreign direct investment – mainly in Western Europe and also in Japan. Within the system of international economic flows, the U.S. exported goods to the rest of the world and also finance these purchases.  Besides, the United States created demand for the exports of...

A bit less than expected- nothing to cause the Fed to be alarmed. You’d think that by now they’d realize that all that rate cutting and so called ‘money printing’ has nothing to do with the price level or ‘accommodation’…: Highlights Price pressures evident the last two months down the supply chain are not yet appearing in consumer prices where the CPI rose only 0.2 percent in June for a weak year-on-year rate that is not going in the right direction, at plus 1.0 percent vs...

It’s hard not to notice, during the American Presidential election drama, that despite all the debates and speeches, and multiple candidates, the terms “Neoliberalism” and “austerity” have yet to be employed, much less explained, these being the two necessary words to describe the dominant economic “regime” of the past 35 years. And this despite the fact that most observers recognize that a “populist revolt” driven by economic unhappiness is underway via the campaigns of Donald Trump and...

from Dean Baker Paul Krugman actually did not make any predictions on the stock market, so those looking to get investment advice from everyone’s favorite Nobel Prize winning economist will be disappointed. But he did make some interesting comments on the market’s new high. Some of these are on the mark, but some could use some further elaboration. I’ll start with what is right. First, Krugman points out that the market is horrible as a predictor of the future of the economy. The market...

from Michael Hudson Review of William Goetzmann, Money Changes Everything:How Finance Made Civilization Possible (Princeton University Press, 2016) Debt mounts up faster than the means to pay. Yet there is widespread lack of awareness regarding what this debt dynamic implies. From Mesopotamia in the third millennium BC to the modern world, the way in which society has dealt with the buildup of debt has been the main force transforming political relations. Financial textbook writers tell...

from David Ruccio This is my own chart—showing the dramatic changes in the average incomes of the bottom 90 percent, the top 10 percent, and the top 1 percent—from the World Wealth and Income Database. Incomes are in thousands of real 2015 dollars. Thus, for example, the average income of the bottom 90 percent fell between 1979 and 2015 (from $34.6 thousand to $33.2 thousand), while the average income of the top 10 percent rose (from $149.1 thousand to $273.8 thousand) and that of the...

It was previously noted that Treasury revenue was down, which now is confirmed in this report. This is the beginning of the automatic fiscal stabilizers at work, where weakness translates intoa larger federal deficit, and persists until deficit spending is sufficient to more than offset unspent income, as is necessary for growth. Private sector deficit spending would also restore growth. However I see only private sector credit growth deceleration, which is generally the...

Exhibit 1. Economic growth became norm only after industrial revolution Looking further back in history, however, we can see that economic stagnation due to a lack of borrowers was much closer to the norm for thousands of years before the industrial revolution in the 1760s. As shown in Exhibit 1, economic growth had been negligible for centuries before that. There were probably many who tried to save during this period of essentially zero growth, because human beings have always been...

A few weeks ago I posted the announcement of Saudi price cuts, suggesting this could be meant to bring down prices, which now seems to be happening: Again, with no loan demand, they are calling for higher rates, presumably to slow down lending: Six Fed banks called for discount rate hike: minutes By Lindsay Dunsmuir July 12 (Reuters) — The number of regional Federal Reserve banks pushing the central bank to raise the rate it charges commercial banks for emergency loans rose...