Yellen ain’t tellin’

Both Alan Greenspan and Ben Bernanke occasionally admitted the truth about U.S. government finances, but Janet Yellen never does. Twice a year she meets with the House Financial Services in a room where a “national debt clock” is permanently installed to remind politicians to always keep lying. Recently Yellen sat before the clock, and as numbers furiously whirred behind her, she warned that the federal government faces an “unsustainable debt situation.”

In a sick society like ours, do-nothings like Yellen are paid well for merely bullshitting. Meanwhile a Wal Mart cashier, for example, is looked down on for doing productive work. Indeed, every time I see someone doing manual labor, I think, “That person is doing something useful for society.”

Speaking of debt clocks, below is one that I’d like to see. Pundits, professors, and politicians chatter about the “national debt crisis” (which is bullshit) in order to distract you from thinking about private debt such as student loans (which is a true crisis).

I once saw a student loan debt clock in my own town. It was quickly removed by order of the city council at the behest of the local state university. I guess the university (and the evil bankers behind it) thought the sign would have an effect like this…


Let me change topics and comment again about Ellen Brown Syndrome (EBS), the illness in which a person falsely believes that all money is created by banks as loans, and that government spending is actually government borrowing . This same illness in the U.K. is called Positive Money Syndrome (PMS). British victims of PMS have their own web site.

My point is that one of the engines of this illness is the natural human urge to blame all our suffering on things outside of us. EBS victims have decided that the central bank (e.g. the Fed or the Bank of England) creates all the money, and thereby rules everything, and that all other banks are its evil minions.  In this way EBS victims pinpoint the cause of all our woes. For the EBS victim, the task is to reveal this Great Truth to others.

My view is different. As I see it, we have a case of the Emperor’s New Clothes. Everyone knows that the federal government can “print” limitless money, yet everyone pretends that they don’t know. For me the task is to encourage people to stop bullshitting and admit what they already know.

For EBS victims the only time the U.S. government created money was during the Civil War when it issued “greenbacks.”

(NOTE: EBS victims acknowledge that 3% of the overall money supply consists of coins and currency notes that are not borrowed from banks. The victims do not grasp that coins and currency notes are not actually money. They can be used as money, but they only represent money. Actual money is not physical, and is therefore limitless. Money, like points on a scoreboard, is a strictly mental system of accounting that is represented by numbers in bank accounts. Each year the U.S. government creates about $4 trillion out of thin air, simply by crediting bank accounts.)

Over at Counterpunch, one writer gets a few things right, because he’s not an economist.

The flow of money from Wall Street and the Federal government illuminates the priorities of empire. Given its imperial position, the U.S. can (metaphorically) print its way to funding the projects that connected plutocrats favor. For instance, where did the funding for Bush’s slaughter in Iraq and Barack Obama’s bailouts of Wall Street come from? Balanced national budgets are an imperial enforcement mechanism turned inward.

Correct, except there is no “metaphorically” about it.

Regarding where the money for wars comes from, the U.S. government simply creates it. Most people falsely think the U.S. government borrows its war dollars from China or…someone.

In recent history ‘emergency’ Federal Reserve policies combined with Obama’s bailouts for Wall Street and austerity for the rest of us constituted the largest wealth grab by connected plutocrats in modern history. And here’s the punchline— because of the U.S.’s (and the ECB’s) privileged position vis-à-vis money creation, there was no need for the austerity. Had Democrats (1) cared and (2) not been equally culpable for the Iraq war they could have pointed out that money is always found (created) for the priorities of empire.

Correct. You win a prize. (Choose one only.)


For those interested in theory, the link between MMT (Modern Monetary Theory) and Marxism would come through taking monetary theory out of the anti-history of mainstream economics and placing it in a (lived) context of class conflict (or ‘capitalist republicanism’ if you prefer).

Careful. When you mention Marx, you turn off people (especially people who have no idea what Marx actually wrote).

Uh…no. No it isn’t. That’s like saying the theory of aerodynamics is “Marxist.”

Will we as a species ever mature past our collective stupidity?

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7 thoughts on “Yellen ain’t tellin’

  1. Money is only a media for trade, not debt. When government creates money and force citizens to accept it with threat of punishment or violence, it is a form of taxation on general public. Mongolian empire first created fiat paper money (which claims representing certain amount of gold) in exchange with material goods. Any merchant refusing to take such fiat papers could face execution. Thus fiat papers backed by lethal force became the media of trade among ordinary people. Anyone who refuses fiat paper money could be reported to Mongol authority and face punishment.

    Theoretically, anyone refusing to accept American Dollars on US soil can face legal punishment. This makes US goverment looks like Mongolian thugs who rob people’s wealth. But that is how it works. Money creation is a form of taxation.

    Some immigrant merchants who refuse to take old dollar bills are playing with fire.

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  2. “If you can’t explain something in simple terms, you don’t understand it” -Richard Feynman

    I am not sure about so called those experts like Yellen.

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  3. [1] “Money is only a media for trade, not debt.”

    Please explain

    [2] “Theoretically, anyone refusing to accept American Dollars on US soil can face legal punishment. ‘

    These days, laws and social convention make force unnecessary. If you have given me a good or a service, and you refuse to accept dollars from me as payment, then I simply leave without paying. If I want to buy a good or service from you, and you will not accept dollars, then I go to a competitor.

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    1. [1] “Money is only a media for trade, not debt.”

      Just look at the history or evolution of money since stone age. It started as something like seashells, salt, then gold and other metals. Finally paper money and digital money come along. Money only helps the exchange of goods between people. Money units serve to quantify the value of goods just like metric system for weight or distance.

      People exchange goods since primitive time. If you visit some hunter-gatherer societies in south America, they still do direct goods exchange without money. Each time they have to bargain or negotiate for the exchange. When both parties have items not desirable by other side, the trade becomes impossible. Thus commonly needed goods became easily the first thing you want to bring to a trading site or market. Such commonly needed goods like jewelry or decorate items like seashells, gem stones are naturally for people bring along to market with their own trading goods. The primitive money (jewelry) emerged to facilitate the trade between people.

      We human need all kind of material to survive and live modern life. With pile of money in your hand, but there is nobody to trade with (buying), you gonna die. So money itself is useless without trade (purchase). You get money because you produced good or service others needed who use money to trade with you at first. So only purpose of money is to serve as media and measuring units between trades.

      Indeed, any time when we buy some goods or receive service for a price, we are participating in the trade. Trading is the core of market economy. One producer who does not participate trading will have to produce everything for himself in life. Example: fugitive survives in wild alone. Such individual’s quality of life is usually miserable and always bordering near death with very low productivity. With more people start trading, life gets better and more products become available. When two people trade, the bargain happens at this small market with both parties negotiate for the price. At this stage, individual control of price is reality. However in large market, the price is commanded by supply/demand ratio which is beyond individual controls in a large efficient market. Size of market matters for market efficiency, optimization of productivity and labor/capital distribution. Any attempt to control price artificially will lead to suboptimal productivity which means inefficient market. Socialism or communism with artificial control of price, labor, capital would lead to malfunction of market which expressed as low productivity and low supply of goods.

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  4. Ray Dalio explains modern economical process pretty well. Credit/debt join and serve also as media for trade. But credit is based on money in circulation. So without inflation (creating money out of thin air) to match credit expansion, credit/debt would collapse cyclically. So inflation is needed to prevent such collapse.

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