I often like working with a hangover because my mind is crackling with energy and I can think very clearly

October 28, 2013 § Leave a comment

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Universal Automation is a Chrome browser extension that automatically searches and applies for jobs on Universal Jobmatch, the government-run job search website which benefit claimants are forced to use.  read more

PHOTOGRAPH: Evelyn Hofer

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I achieved what all artists dread: I had outlived most of my money and all of my talent

September 11, 2013 § Leave a comment

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In Japan in the early 1990s, a young psychiatrist named Saitō Tamaki began seeing patients with a cluster of strange symptoms. Actually, he barely saw them at all; more often than not, other family members would approach him about a brother or a son who was afflicted with an unfamiliar state. Mostly men on the threshold of adulthood, they were retreating to their rooms, shrinking from all social contact or communication, and closing off into themselves, often for periods of a year or more. Not wanting to kill themselves but unable to live in society, these youths folded inward in an attempt to fit themselves away. Saitō began calling them hikikomori sainen, “withdrawn young men,” and in 1998 published a book with his findings called Shakaiteki hikikomori—Owaranai Shishunki, or Social Withdrawal—Adolescence Without End.

Saitō ventured a count: There were 1 million people in a state of withdrawal or hikikomori, about one percent of the Japanese population. Eighty percent of them were men; 90 percent were over 18. “Social withdrawal is not some sort of ‘fad’ that will just fade away,” Saitō wrote. It is “a symptom, not the name of an illness,” and “there has been no sign that the number of cases will decrease.” His book became a best seller in weeks. Hikikomori joined otaku (a person with obsessive interests) and karoshi (death from overwork) as a loan word in English to describe a new social phenomenon that at first appeared uniquely Japanese. A few American authors have picked up on it as an enigmatic or convenient trope (in books like Shutting Out the Sun: How Japan Created Its Own Lost Generation by Michael Zielenziger and Hikikomori and the Rental Sister by Jeff Backhaus, most recently). But only now has Saitō’s original work been translated, by Jeffrey Angles, published by University of Minnesota Press in March.

Culturally bound psychological phenomena always fascinate the press because they excite the categories of racism through a veneer of scientificity. But Saitō was explicit on this point: Though his patients’ ­symptoms all emerged in some way through the Japanese social order, there was nothing intrinsically Japanese about the phenomenon. In fact, he had coined the term hikikomori to translate work that an American psychologist had done on similar cases of acute social withdrawal and later joined it up with the sociological category of NEETs (not in education, employment, or training) in Britain. His internationalism slyly made room for an astonishing claim: The structure of age itself was beginning to break down.  read more

PHOTOGRAPH: Clifford R Adams

I felt Siroccos – crawl

September 3, 2013 § Leave a comment

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When I was living on £10 a week for food, because of mistakes with housing benefit payments, I didn’t need a hug. I needed a fiver, just to have a little bit more to eat. I didn’t need to be teleported to Sicily to see how the street cleaners ate, I needed someone to point out that the 21p can of kidney beans could be the staple ingredient in a nutritious meal. I needed practical advice about what to do with the tins of food given to me by the food bank.

As I said in an earlier blog post: “Try it. For a month, or two, or five. Unscrew your lightbulbs, turn off your fridge, sell anything you can see lying around that you might get more than £2 for. Missing days of meals, with the heating off all winter, selling your son’s shoes and drinking his formula milk that the food bank gave you. Stop going out. Walk everywhere, even in the pouring rain, in your only pair of shoes, with a wet and sobbing three-year-old…

“Drag that three-year-old into every pub and shop in unreasonable walking distance and ask if they have any job vacancies. Get home, soaking, still unemployed, to dry out in a freezing cold flat. Then drag yourself to the cooker to pour some pasta into a pan, pour some chopped tomatoes on top, and try not to hurl it across the room when your son tells you that he doesn’t like it… You’re full of rain and heartache and anger and despair and it’s starting to seep through the cracks…”

This person does not pop down to a local market and smile sweetly at the stallholder for a handful of gourmet vegetables. This person throws whatever is in the cupboard into a saucepan and prays that her child will eat it.  read more

ART: Henri Rousseau

Ain’t got no time for Western medicine

April 10, 2013 § Leave a comment

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So back to the 70′s, and continuous oil price hikes by a foreign monopolist. All nations experienced pretty much the same inflation. And it all ended at about the same time as well when the price of crude fell. The ‘heroes’ were coincidental. In fact, my take is they actually made it worse than it needed to be, but it did ‘get better’ and they of course were in the right place at the right time to get credit for that.

With the price of oil being hiked by a foreign monopolist, I see two choices. The first is to try to let there be a relative value shift (as the Fed tries to do today) and not let those price hikes spill into the rest of the price level, which means wages, for the most part. This is another name for a decline in real terms of trade. It would have meant the Saudis would get more real goods and services for the oil. The other choice is to let all other price adjust upward to keep relative value the same, and try to keep real terms of trade from deteriorating. Interestingly, I never heard this argument then and I still don’t hear it now. But that’s how it is none the less. And, ultimately, the answer fell somewhere in between. Some price adjustment and some real terms of trade deterioration. But it all got very ugly along the way.

It was decided the inflation was caused by unions trying to keep up or stay ahead of things for their members, for example. It was forgotten that the power of unions was a derivative of price power of their companies, and as companies lost pricing power to foreign competition, unions lost bargaining power just as fast. And somehow a recession and high unemployment/lost output was the medicine needed for a foreign monopolist to stop hiking prices??? And there was Ford’s ‘whip inflation now’ buttons for his inflation fighting proposal, and Carter with his hostage thing adding to the feeling of vulnerability. And the nat gas dereg of 1978, the thing that actually did break the inflation two years later, hardly got a notice, before or after, and to this day.

As today, the problem back then was no one of political consequence understood the monetary system, including the mainstream Keynesians who had been the intellectual leadership for a long time. The monetarists came into vogue for real only after the failure of the Keynesians, who never did recover, and to this day I’ve heard those still alive push for price and wage controls, fixed exchange rates, etc. etc. in the name of price stability.

So in this context the rise of Thatcher types, including Reagan, makes perfect sense. And even today, those critical of Thatcher type policies have yet to propose any kind of comprehensive proposals that make any sense to me. They now all agree we have a long term deficit problem, and so put forth proposals accordingly, etc. as they are all destroying our civilization with their abject ignorance of the monetary system. Or, for some unknown reason, they are just plain subversive.

Thatcher? It was the blind leading the blind then and it’s the same now.  read more

COVER: [unattributed]

Now hold on. I can hear you counting. One two three four. I know you’re coming around me. What I propose is that we move out together. Count it out together. That was always the plan

February 20, 2013 § Leave a comment

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So what would happen if a sovereign, currency-issuing government (with a flexible exchange rate) ran a budget deficit without issuing debt?

Like all government spending, the Treasury would credit the reserve accounts held by the commercial bank at the central bank. The commercial bank in question would be where the target of the spending had an account. So the commercial bank’s assets rise and its liabilities also increase because a deposit would be made.

The transactions are clear: The commercial bank’s assets rise and its liabilities also increase because a new deposit has been made. Further, the target of the fiscal initiative enjoys increased assets (bank deposit) and net worth (a liability/equity entry on their balance sheet).

Taxation does the opposite and so a deficit (spending greater than taxation) means that reserves increase and private net worth increases.

This means that there are likely to be excess reserves in the “cash system” which then raises issues for the central bank about its liquidity management. The aim of the central bank is to “hit” a target interest rate and so it has to ensure that competitive forces in the interbank market do not compromise that target.

When there are excess reserves there is downward pressure on the overnight interest rate (as banks scurry to seek interest-earning opportunities), the central bank then has to sell government bonds to the banks to soak the excess up and maintain liquidity at a level consistent with the target. Some central banks offer a return on overnight reserves which reduces the need to sell debt as a liquidity management operation.

There is no sense that these debt sales have anything to do with “financing” government net spending. The sales are a monetary operation aimed at interest-rate maintenance. So M1 (deposits in the non-government sector) rise as a result of the deficit without a corresponding increase in liabilities. It is this result that leads to the conclusion that that deficits increase net financial assets in the non-government sector.

What happens when there are bond sales? All that happens is that the bank reserves are reduced by the bond sales but this does not reduce the deposits created by the net spending. So net worth is not altered. What is changed is the composition of the asset portfolio held in the non-government sector.

The only difference between the Treasury “borrowing from the central bank” and issuing debt to the private sector is that the central bank has to use different operations to pursue its policy interest rate target. If it debt is not issued to match the deficit then it has to either pay interest on excess reserves (which most central banks are doing now anyway) or let the target rate fall to zero (the Japan solution).

There is no difference to the impact of the deficits on net worth in the non-government sector.

Mainstream economists would say that by draining the reserves, the central bank has reduced the ability of banks to lend which then, via the money multiplier, expands the money supply.

However, the reality is that:

• Building bank reserves does not increase the ability of the banks to lend.
• The money multiplier process so loved by the mainstream does not describe the way in which banks make loans.
• Inflation is caused by aggregate demand growing faster than real output capacity. The reserve position of the banks is not functionally related with that process.

So the banks are able to create as much credit as they can find credit-worthy customers to hold irrespective of the operations that accompany government net spending.

This doesn’t lead to the conclusion that deficits do not carry an inflation risk. All components of aggregate demand carry an inflation risk if they become excessive, which can only be defined in terms of the relation between spending and productive capacity.

But it is totally fallacious to think that private placement of debt reduces the inflation risk. It does not.  read more

PHOTOGRAPH: Inès

Why is it good to support the leveraging of private property, but not the supply of public infrastructure?

February 15, 2013 § Leave a comment

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You will not send a letter or a telegram; you will simply identify the people whose files should be linked to yours and the parts to which they should be linked-and perhaps specify a coefficient of urgency. You will seldom make a telephone call; you will ask the network to link your consoles together…

When people do their informational work “at the console” and “through the network,” telecommunication will be as natural an extension of individual work as face-to-face communication is now. The impact of that fact, and of the marked facilitation of the communicative process, will be very great—both on the individual and on society.

First, life will be happier for the on-line individual because the people with whom one interacts most strongly will be selected more by commonality of interests and goals than by accidents of proximity. Second, communication will be more effective and productive, and therefore more enjoyable. Third, much communication and interaction will be with programs and programmed models, which will be (a) highly responsive, (b) supplementary to one’s own capabilities, rather than competitive, and (c) capable of representing progressively more complex ideas without necessarily displaying all the levels of their structure at the same time-and which will therefore be both challenging and rewarding. And, fourth, there will be plenty of opportunity for everyone (who can afford a console) to find his calling, for the whole world of information, with all its fields and disciplines, will be open to him—with programs ready to guide him or to help him explore.

For the society, the impact will be good or bad, depending mainly on the question: Will “to be on line” be a privilege or a right? If only a favored segment of the population gets a chance to enjoy the advantage of “intelligence amplification,” the network may exaggerate the discontinuity in the spectrum of intellectual opportunity.

On the other hand, if the network idea should prove to do for education what a few have envisioned in hope, if not in concrete detailed plan, and if all minds should prove to be responsive, surely the boon to humankind would be beyond measure.

Unemployment would disappear from the face of the earth forever, for consider the magnitude of the task of adapting the network’s software to all the new generations of computer, coming closer and closer upon the heels of their predecessors until the entire population of the world is caught up in an infinite crescendo of on-line interactive debugging.  read more

PHOTOGRAPH: Eliot Elisofon

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