Lethal virus also killing capitalism

A lot of talk of universal basic income, there setting the entire world up to be a police state.

Why is the question ?? and don't give me it's a virus and it's killing poorly old people, nobody has ever cared about them, it's an excuse to screw us all over in a new and exciting way.
 
themickey said:
I don't pretend to understand the above, but I'm sure some here will.
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I do, and its a brilliantly insightful observation of where our global, political economies are headed. China and the U.S. will lead the way, and in fact are leading the way. The EU has been held back by German Finance ministers, but they will eventually have no choice but to give way to reality and cast aside their hopelessly outmoded and harmful thinking.

In 2008, a major financial "dislocation" occurred, as Shvets calls these events. As a result, we experiencedwhat could be considered the U.S. Central Bank-Treasury acting upon Modern Money Theory (without formal acknowledgement). It was a tacit acceptance of the theory.

MMT can be traced back at least as far as Abba Lerner's writings in the late 1940s. Of course in Lerner's world, nascent MMT thinking was tempered by the constraints of commodity based currencies. With the unleashing of sovereign currencies starting in 1971, the full nature of fiat money, its freedom and pitfalls, began to be more widely recognized. In the U.S., this occurred among economists who were proteges of Lerner and Minsky -- the latter, in contrast to some of his colleagues, thoroughly understood the new Keynsian economics. The scholars of what became MMT delved into every aspect of central bank and treasury operation as it actually occurs in our present world of sovereign fiat currencies. Only very, very recently did these economists begin to be formally recognized as having contributed something of value and as having been profoundly correct, at least in some, if not most, respects! Of course, we all must recognize that MMT, being a drastic break from pre-1971 conventional thinking regarding government financial operations, is not going to be instantly well-understood among economists in general, and certainly not among the public. The first undergraduate macroeconomics text by two stalwarts of the MMT school of economics -- W. Randall Wray, and William Mitchell -- is just now out. It will be a block buster. At the same time, it's bound to be the subject of withering criticism -- and I might note here that so was Keynes "General Theory ..." when it first appeared. As always, the proof of the pudding will be in the eating.
 
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Real Money said:
Basically, he is saying that the debt levels and asset bubbles are gonna get so big that in the next crisis, there won't be any choice but to have universal basic income, else there will be a severe deflationary depression and/or total economic collapse, i.e. debt deflation.

(this is basically saying that the Fed will succeed at making more bubbles until then)

All the bailouts and stimulus are to protect the asset bubbles.

This is because so much employment is dependent on the existence of weak, non-productive, and overly indebted (capital intensive) businesses. Small businesses are in this group.

It was the only way to drive consumption because most of American households are being abused by corporate rent seeking - they have zero real assets. But, they have regulatory compliant FICO scores and an eagerness to indebt themselves. This was collateralized, the securities were insured (by the gov), then passed on to passive investors (pension funds).

This trade was structured so that the risks are not shared equally.***

The real problem is that the Fed can only stimulate so much. At the end of the day, if a business entity is not viable, it will not obtain financing. If it does obtain financing and fails, then the investors will have to take a haircut. Fed is trying to prevent this because the GSE's insured all the paper and are now potentially on the hook for 10's of trillions.

Even with all of the bullshit that is going on with the GSEs, CLOs, CMBS, and the balance sheet and rate manipulations, a COVID economy is going to be a weaker economy.

This will mean the dissolution of non-viable business entities. This will mean real estate defaults, foreclosure and bankruptcy for the shadow banks.

The multinational banks are not running a charity here guys. They're gonna tighten up credit just like they did in the last crisis. They'll be forced to take the assets, warehouse them and/or hand them off to Blackrock, Blackstone, and the rest of them.
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There is a good amount of food for thought in your post. I printed it out so I can have more time with it. Thanks for a nice contribution to this forum.. There is one thing in your post that I believe is a common mis-understanding, and that is that "the fed makes bubbles". If we looked carefully at this, I think we would have to conclude that the fed does not create bubbles so much as they either allow or facilitate them. In the opinion of many economists, bubbles, which are part and parcel of cyclical economies, are a natural consequence of human nature in a capitalist economy. I don't know of anyone who thinks they can be entirely avoided in a capitalist economy, but there are those, such as myself and George Soros, who believe they could at least be recognized early and tamed by timely Central Bank or fiscal policy.
 
Fed is the cause of large systemic risk and bubbles...pretty simple...print print print call it something sophisticated get people to believe an economic paradigm that includes this kind of intervention as being good. Then blame the market when misallocation happens from artificially low interest rates , ad more intervention and rinse and repeat.. interest rates are the fundimental signal to entrepreneurs and lenders as to the current risk in the market. Lend below the free market interest rate and get money going into businesses that normally wouldn't be viable at a higher interest rate ..bubbles!!!
 
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