Fashionable Economics 192


The ludicrous thing was that Britain had a AAA rating in the first place.

It is four years since I started pointing out the blindlingly obvious, that quantitive easing would cause inflation and devaluation. Four years ago this blog had far fewer readers than it does now, and I am quite proud of that piece, so do read it.

At the time it was a deeply unfashionable view – in part because it was New Labour doing it, so all the BBC and Guardianista media were backing quantitive easing. Even when I wrote this two years ago:

Inflation as measured by the retail price index remains stubbornly at 5.2%, despite all the obvious deflationary pressures on the economy and continuing weak consumer demand. Strangely, the attempts to explain this being offered by media pundits all miss out quantitive easing, or to use a more old-fashioned term, printing money.

It is deeply unfashionable to hold to the view that simply to create more money reduces the value of the money already in circulation in relation to the supply of available goods; but that is what all history tells us (the benchmark example being the rampant inflation after Spanish opening up of the New World greatly increased the amount of gold coinage in circulation). Common sense tells us that too. Otherwise we could simply solve many of our problems by printing another couple of trillion pounds.

A couple of years ago, I suggested “Enough quantitive easing and we can eventually get back to stagflation”. We are just about there. Why have none of the experts noticed?

nobody much agreed.

Fashion in economics is fascinating. Now every financial pundit on the BBC and Sky has noticed that quantitive easing causes devaluation and inflation. Suddenly they have remembered that if you create a lot of something, it decreases its unit value.

Hey, but the banks have the money that was created, and bank bonuses are back to normal. So all is fine.


Allowed HTML - you can use: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

192 thoughts on “Fashionable Economics

1 3 4 5 6 7
  • Arbed

    Hi Ben,

    None, I’m afraid. AFAIK, the Knights Templar existed back at the time of the crusades but I don’t think they outlasted the Grand Masters’ rule of Malta. The Knights of Malta would be their modern equivalent, I suppose – ostensibly a charitable organisation but I think Hersh is right, there’s more to it than that. Apparently, a lot of US Army bigwigs simply buy their Order of the KoM titles – maybe just a vanity thing but it feeds into a marked Christian fundamentalism in the top echelons of the US Army.

  • resident dissident

    @Fred

    “But our sports organisations still refused to participate in games with them. Which is more akin to what happens at a debating society, a competition, with spectators.”

    But debating is not a team sport – and even if it was I very much doubt that the Israeli who Galloway objected to would have been on the team given his views on settlements.

    @Nevermind

    “As bad as Netanyahu” is not a badge to wear with pride.

    @Mary

    One of the problems with free speech is that people raise points and matters that you disagree with – especially if they are in the same article that you link to. Try not to matronise us by assuming that we will all read things exactly the way that you want. I also notice that you have avoided answering the question asked.
    And since you were soliciting views on the Bullingdon Club – yes they are a bunch of patronising tossers with no perception of anyone’s feelings or viewpoint other than their own and are so arrogant that they do not feel that they even have to engage with those whom they disagree unless forced to do so.

    English Knight
    I/we are crypto what – spit it out man. Or you could just be polite and say that you disagree and say why – or perhaps you are just a crypto Englishman?

  • Ben Franklin -Machine Gun Preacher (unleaded version)

    Read RAW in the early 80’s. A true spiritual giant. It was sad when his young daughter was murdered, but he didn’t let that tragedy make him bitter. Yes we do see through a glass, darkly.
    We see but the narrowest spectrum of light with our eyes, yet we somehow think we see. Bohm is one I missed.

    Have you heard of (ancient history now) ‘Programming and meta-programming the human bio-computer’ by Dr. John Lilly? RAW recommended its reading.

  • Ben Franklin -Machine Gun Preacher (unleaded version)

    Anon; Self-beknighting seems par for the course. But knights are of a militant bent, hence my assumption that Crusaders, past and present, don’t have much to do with the Beatitudes of Christian foundation, and have common agendas.

  • Ben Franklin -Machine Gun Preacher (unleaded version)

    Arbed: from your Vice link….

    ” Without Barrett Brown, tons of this research would likely have gone unearthed. Besides a few journalists, not many people have been looking into this information. ”

    Without a doubt, these prosecutions (JA, Scwarz, Brown and even Hersh) have a ‘chilling effect’ on reportage. This is the genuine agenda; yet if they can get someone (Aaron) to become a CI, it’s just a bonus. The goal is to shut people up.

  • Ben Franklin -Machine Gun Preacher (unleaded version)

    Arbed and Anon. My aplogies…..My 7:14 was in response to Arbed, not Anon.

  • Anon

    Yes, I’m aware of Lilly but I haven’t read that book.

    Wilson went on to write a number of non-fiction books. They’re worth a read as well if you haven’t yet.

    https://en.wikipedia.org/wiki/Robert_Anton_Wilson

    On January 6, 2007, Wilson wrote on his blog that according to several medical authorities, he would likely only have between two days and two months left to live.[40] He closed this message with “I look forward without dogmatic optimism but without dread. I love you all and I deeply implore you to keep the lasagna flying. Please pardon my levity, I don’t see how to take death seriously. It seems absurd.”

  • Fred

    “Any thoughts about connection between KoM and Knights Templar? Malta was their base.”

    I think you may be confusing the Knights Templars with the with the Knights Hospitallers.

  • Clark

    Anon, 24 Feb, 4:39 pm; I’ve just got home from a fascinating conversation with a friend in a government-associated department / company (I’m not sure which, you know how it is these days) that is tasked with taking an overview of available technology, and ensuring that the appropriate departments in diverse industries are made aware of techniques available from other sectors.

    One thing this department was investigating was options for “spent” fuel. When I first discussed this with my friend over a year ago, his department already knew about MSRs; it was one of the options on their list to be investigated. In our follow-up conversation today, he told me that they basically didn’t bother looking into MSRs because political / economic manoeuvring will make development economically impossible.

    The power companies know that generation capacity will fall behind demand in 2014, and thus they have the government over a barrel. Various suppliers of nuclear power stations simply told the government that they wouldn’t build any power stations unless they were guaranteed twice the market rate per unit of electricity supplied. The five companies submitting tenders has decreased to two, both of which are still demanding twice the market rate for their electricity.

    So the government has opted for gas, because gas powered generation is cheap in terms of capital investment and quick to build. But gas is expected to rise in price; 30% increases in the price electricity are expected within a few years or less. The nuclear companies only have to wait, as the generation shortfall is guaranteed. The longer they leave it, the more leverage they have. They have precisely zero motivation to invest in research and development, because they know that their familiar technology will be in demand soon enough, and with the danger of rolling blackouts, no one is going to be much concerned with piles of “spent” fuel. In the meantime, speculation upon their guaranteed future profits will bring them more money than actually selling electricity at anything less than twice the current price.

    I say that there’s a political tool to defeat such economic blackmail. It’s called nationalisation, but apparently it’s too unfashionable.

    Sorry for the somewhat confused report, but that’s about the gist of it.

  • Fred

    “But debating is not a team sport – and even if it was I very much doubt that the Israeli who Galloway objected to would have been on the team given his views on settlements. ”

    Irrelevant.

  • Fred

    “Perhaps those who gave might want to see that their donations have been properly accounted for.”

    Oh they know where their money went they just don’t want the American government to know.

    America had Nelson Mandela classed as a terrorist till 2008 you know. they actively supported apartheid in South Africa.

  • Clark

    One of the two companies still tendering is the French EDF. We’ve read reports here that the French military in Africa are “safeguarding” the uranium deposits (does ore in the ground need protection from “islamists”?), so I suspect that might not be mere coincidence.

  • Habbabkuk (La vita è bella!)

    I think someone should write to George Galloway at the House of Commons (he’s there almost every day, don’t forget!) and ask him why his charity’s accounts are late.

    I nominate Fred for this task because Fred believes that the law of the land should be respected and because Fred appears to be favorably inclined to Mr Galloway and his works.

  • Anon

    Clark,

    Interesting. Thanks for that.

    We are about to lose a relatively small amount of coal capacity soon but I wonder if the later planned shutdown of many more coal stations happens to schedule – whatever international obligations say. Then, assuming we still have access to imported coal – the nuclear companies may not wield so much power. Let’s see what happens. But if there’s a big enough crisis…

    And then soon after Skunk Works will be shipping out 100MW fusion reactors by the boatload and we can all party on for a few more years with “limitless energy”. I wonder how that would go and if we would use it wisely. No need to answer that 🙂

    Btw, last 24 hours UK generation mix fron National Grid.

    Coal 45%
    Gas 24%
    Nuke 20%
    Wind 4%
    Hydro 1%

    International Import 4%
    Other 2%

  • Clark

    Anon, I don’t regard your points at 24 Feb, 4:39 pm as a good arguments against MSRs. Yes, the Molten Salt Reactor Experiment was not decommissioned safely, and it wasn’t monitored properly after decommissioning. But that’s not an issue for MSRs in operation, as UF6 and fluorine production only occur after the salt has cooled down. Besides, that particular lesson has now been learned.

    Also, U233 is not a weapons proliferation problem unless it is removed from the reactor, and that isn’t part of normal operation. U233 remains in the fuel salt until it is all burned down to reaction products; there’s no need to transport the stuff around. Attempting to illicitly remove U233 would be rapidly fatal. If the risk we’re considering is that entire MSRs could fall under actual long-term control of a hostile power so that the U233 could be removed in good order, well, that implies that the hypothetical war would have already been lost.

    However, discussions with a (different) friend suggested another problem. Any sort of nuclear facility becomes a long-term risk in the event of serious economic / political collapse, as might be caused by climate change etc. The programme to turn “spent” fuel into electricity and lighter isotopes has a time-scale of thousands of years.

  • Fred

    “I nominate Fred for this task because Fred believes that the law of the land should be respected and because Fred appears to be favorably inclined to Mr Galloway and his works.”

    That spanking I gave you over the Iceland bankers really got to you didn’t it?

    I own you now, I’m in your head, you’ll write my name in every post:)

    Sweet dreams, if you can sleep that is.

  • Clark

    Anon, oh:

    “but I wonder if the later planned shutdown of many more coal stations happens to schedule – whatever international obligations say.”

    My friend mentioned that, and your suspicion is correct. All existing power stations are going to be run beyond their planned life expectancy, partly by patching stuff up, but (my own speculation) probably mostly by loosening the licensing requirements.

    Fucking politicians. Fucking worship of money. How do you get these idiots to doanything with any foresight? This needs treating as a physical problem, not an economic one.

  • Clark

    Anon, 9:02 pm

    “and we can all party on for a few more years with “limitless energy”. I wonder how that would go and if we would use it wisely.”

    Funnily enough, in the 1980s I was present in the lab at York University when they tried to replicate the cold fusion experiment. A bitter-sweet experience. Disappointment that the temperature on the thermometer failed to rise to the expected level. Relief (back in them Cold War days before global warming) that “limitless energy” hadn’t been granted to a species that lacked the wisdom to put it to good use.

  • resident dissident

    “Oh they know where their money went they just don’t want the American government to know.”

    But they are still happy to allow the charity to claim Gift Aid from the UK Government which shares intelligence with the evil empire.

    And I think you missed out “in my view” after “irrelevant” in one of your decrees. The fact that many Israelis are able to express views different from that of Netanyahu and his crew is something that is highly important and might actually lead to progress being made one day – just like De Klerk was able to express different views from others in the leadership of South Africa – just read the book I recommended earlier.

  • Anon

    Clark,

    You just won’t let that Thorium MSR go will you? 🙂 It isn’t going to happen on a huge scale. The anti-proliferation experts won’t allow it and never would. Ever wondered if it was rapidly terminated because the project was out of control and dangerous?

    Well that’s just one alternative opinion from reading between the lines but it is dead easy to have a hidden Thorium/U-233 nuclear bomb project at nation state level as at least two countries (US and India) have admitted it only after the fact. The major proponents can shout all they like about proliferation resistance of the Thorium cycle but that doesn’t stop countries making bombs out of them in real life because all the “problems” were solved decades ago. And no I’m not going to speculate what terrorists might or might not do with control of an MSR.

    Once you take the proliferation resistance argument out of the picture (As MIT did) then you might as well stick with the Uranium/Plutonium cycle we have now for the foreseeable future. And that’s what the very brightest at MIT say when they look objectively.

    Oh and show me a working MSR where: “U233 remains in the fuel salt until it is all burned down to reaction products” (assuming you keep topping it up with more to burn-up of course). All we have is fantasies about future possible designs. At least in a conventional reactor the fissionable material is always kept “locked” inside the fuel element. Can’t think of anything going wrong circulating multiple critical masses indefinitely around a system where not only the chemistry is changing minute but even your actual elements. Can’t think of any dangers at all.

    The Chinese are finding it not as easy going as hoped. They’ve just announced that the projected completion date for their 2MW prototype MSR has now been put back to 2020.

    http://www.the-weinberg-foundation.org/2012/10/30/completion-date-slips-for-chinas-thorium-molten-salt-reactor/

    The new timescale seems to reflect the significant design challenges that have been evident over the first two days of the conference, where experts from China and around the world have described various hurdles to the thorium molten salt reactor. Among them:

    Developing materials or processes that can withstand corrosive salts, temperatures much higher than conventional nuclear, and radiation.

    Assuring that the failsafe “freeze plug” works and thus allows TMSRs to live up to the claim that they are “meltdown proof.” In a TMSR, a plug melts when the reactor overheats, allowing the liquid fuel to drain into a safe tank.

    Developing processes for the safe removal of actinides. Although TMSRs do not leave behind the longer living wastes of conventional uranium reactors, they still produce toxic elements, albeit with a shorter lifespan.

    My guess is that will slip and slip and the list will grow and grow and there never will be a large scale production system based on it.

  • Anon

    There are interesting concepts emerging from Low Energy Nuclear Reaction research. I’m watching with interest but it might never be more than a curious toy compared to hot fusion. Would be nice if clean cold fusion at high power output was possible though. Probably our luck to find a nasty can of worms there as well though!

  • Ben Franklin -Machine Gun Preacher (unleaded version)

    Anon; I cheated and went to the Cliff Notes.

    Bohm is new to me, so thanks.

    Just as the enigmatic physics of waves vs particles, seems contradictory, so too the Relativity and Quantum theories seem to cancel one another out. But I think the point has to do with our observable world and it’s limitations.

    The Ink droplet analogy was, in human terms, like a Rorshach with subjectivity, not objectivity, as the measure.

    “For Bohm, the whole encompasses all things, structures, abstractions, and processes, including processes that result in (relatively) stable structures as well as those that involve a metamorphosis of structures or things.”

    http://en.wikipedia.org/wiki/Implicate_and_explicate_order_according_to_David_Bohm

    His metaphysics are a lot closer to the idea of a Unified Field Theory, which confounded Einstein, to the end.

  • Anon

    <blockquoteE
    Fucking politicians. Fucking worship of money. How do you get these idiots to doanything with any foresight? This needs treating as a physical problem, not an economic one.

    They will “solve the problem” with World War 3 if necessary. That seems to be the game-plan. What do you expect from sociopaths?

  • Ben Franklin -Machine Gun Preacher (unleaded version)

    Don’t wish to rush through the dialogue, as it must be absorbed slowly for the import to gel, Anon.

    I thought this exchange rather enlightening;

    ————————————–

    DB: Yes it is true in that regard. I think it would be untrue to say the mind evolved in time.

    K: Of course.

    DB: But physically it seems clear there has been a process of evolution and this has increased the capacity of the brain to do
    certain things. But for example we couldn’t be discussing this if the brain had not grown larger.

    K: Of course sir, I understand all that.

    DB: But I think you are implying that the mind is not originating in the brain. Is that so? The brain is perhaps an instrument for it, of the mind?

    K: The mind. And the mind is not time.

    DB: The mind is not time. K: Just see what it means. We are getting nearer.

    DB: It does not evolve with the brain.

    K: Sounds odd, doesn’t it?

    DB: It would sound odd to persons not used to it, In the past
    people used to accept this idea quite easily.

    K: The mind not being of time, and the brain being of time – is
    that the origin of conflict?

    DB: That may be an important point.

    K: You understand sir what that means? The Hindus say the
    Atman, the highest Principle is in man, which is the mind. I may be translating wrongly, interpreting it wrongly. And the brain is of time. I am putting it, they may not put it that way. So is that the origin of conflict?

    DB: Well we have to see why that produces conflict. It is not clear to say even that the brain is of time, but rather it has developed in such a way that time is in it.

    K: Yes, that is what I meant.

    DB: But not necessarily so.

    K: It has evolved.

    DB: It has evolved so it has time within it.

    K: Yes as it has evolved, time is part of it.

    DB: It has become part of its very structure

    K: Yes.

  • Clark

    Anon, I agree that MSRs will probably never be developed in the “West”, but beyond that, your arguments are sadly disappointing.

    Your proliferation argument is self-contradictory; if it is so easy to use MSRs to produce weapon cores, states would do so covertly, out of the control of “the anti-proliferation experts”. Also, the Oak Ridge MSRE papers would never have been published, and the IAEA would be opposing China’s current programme.

    The Molten Salt Reactor Experiment was not “rapidly terminated”. The scheduled tests, including the post-shutdown tests were completed. Theoretical development of the Molten Salt Breeder Reactor continued until seven years later; it was that which was rapidly terminated, and it was a political decision about funding. Alvin Weinberg was the primary developer of both MSRs and PWRs, and he preferred the MSR on the grounds of safety.

    Just over one critical mass of fuel salt is circulated, not “multiple masses”. Removal of fission products from the fuel salt is theoretically possible but yet to be demonstrated.

    The article you linked to is by a blogger who seems to understand the matter less than I do myself. For instance, the corrosion problems he speculates about were solved in the ’60s, and the freeze plug was tested every Friday for four years; the staff would just simulate a power failure by turning the fan off, watch the reactor drain itself, and go home for the weekend. The blogger demonstrates further ignorance by inventing a problem of “developing processes for the safe removal of actinides”. MSRs destroy actinides; that’s the point of building them. He means “reaction products”. I must write to the Weinberg Foundation and alert them to his lack of understanding.

    And the Chinese have allotted themselves another three years; big deal! Eight years to develop a working prototype, when our lot can’t even make a decision in that time frame.

    Anon, I don’t mind you arguing against MSRs; I’d actually like to see some arguments that get me thinking. But I’m sorry, what you’ve presented here isn’t very good.

1 3 4 5 6 7

Comments are closed.