Government Regulation and Crony Capitalism is Keeping Thousands in Florida without Power

Almost two weeks have passed since Hurricane Irma made landfall in South Florida, yet tens of thousands remain without power. With temperatures regularly eclipsing over 90 degrees, these outages are not only a grave inconvenience for Floridians cleaning up after the storm, but have proved to be deadly. Given the power of Irma, it is not surprising that it has left behind incredible devastation. Unfortunately it is also not surprising that it is a government-protected utility that has done the most to impede recovery. The pain and suffering currently being felt is the direct result of government policy and the perverse incentives of crony capitalism.
One of the talked about examples of how bad policy is making things worse for Florida families are a variety of government policies that discourages the use of solar power in the Sunshine State. Government policy dictates that Floridians are required to be connected to the central power grid, even if they have enough solar panels installed to power their entire house. Because of this requirement, a family stuck in areas without power with solar panels installed cannot use them now because doing so could endanger workers trying to restore power for their neighbors. Once again government’s desire for centralized control has unintended consequences.
Of course, even without such rules, it’s unlikely that all of Florida would decide to go off the grid. Given that, it’s important to understand how the legal monopoly granted to electric companies not only traps customers into being entirely reliant upon a single company, but actively incentivizes those companies to be reactive – rather than proactive – when it comes to natural disasters and other events that threaten service.
After all, companies like Florida Power & Light will respond to Irma as they have done to hurricanes past, by increasing prices on their customers. Unfortunately, the revenue reaped seems to have made little impact in FPL’s preparedness for future storms. While the company has reported that its recovery efforts have moved faster this year than when Hurricane Wilma hit South Florida in 2005, more residents suffered outrages due to Irma – in spite of the fact that Wilma actually had higher sustained winds when it made landfall.

This post was published at Ludwig von Mises Institute on Sept 20, 2017.

The Way Congress Is Handling Health Care Shows Why They Only Have A 17 Percent Approval Rating

The Senate health care bill was unveiled on Thursday, and it appears to be dead on arrival. At least four conservative senators say that they can’t vote for the current version because it doesn’t go far enough, while several moderate Republicans are expressing concerns that it goes too far in repealing popular Obamacare provisions. You can read the full text of the bill here. Since Democrats are going to be united in voting against any bill that the Republicans put forward, Senate Majority Leader Mitch McConnell can only lose two Republican votes if he wants something to pass. I don’t know how that is going to be possible, and so in the end we may be stuck with Obamacare for the foreseeable future and that would be a total disaster.
It is astounding to me that Republicans don’t want to pass the exact same clean Obamacare repeal bill that they got to Obama’s desk in 2016. If they got that same bill to Trump’s desk, he would sign it. Instead of trying to do everything at once, just repeal Obamacare and then start working on various pieces of the health care system one at a time.
According to Real Clear Politics, Congress currently has an average approval rating of just 17.6 percent. It is an institution that has failed the American people over and over again, and we are never going to move things in a positive direction in this country until we do something to clean up that cesspool of filth and corruption.
If we truly want to fix health care in this country, we need to rebuild the entire system from the ground up based on free market principles. But of course the bill that was just unveiled in the Senate simply tries to patch up the system we already have, and that ultimately won’t work…

This post was published at The Economic Collapse Blog on June 22nd, 2017.

Grenfell Analysis: Disaster Result of ‘Regeneration’ Corruption & UK Govt ‘New Deal for Communities’

The public-private corruption is both systematic and far-reaching. After reviewing the evidence, a number of disturbing items have emerged indicating poor practice in the installation of flammable cosmetic panels on the exterior of Grenfell Tower in West London. Looking further into the matter, it’s also clear of the an elite bureaucracy presiding over the UK government’s own cynical, profit-driven ‘regeneration’ programs, and more specifically the ‘New Deal for Communities’ backed-up by the shadowy political charity known as Common Purpose – a program pushed through by both New Labour and Lib-Con Conservative governments since the late 1990’s.
The following independent news program was broadcast the day after the Grenfell Tower disaster, as UK Column co-anchors Brian Gerrish and Mike Robinson, joined by 21WIRE’sPatrick Henningsen and David Scott delivering a full breakdown and analysis of the tragic events in London. Watch:

21st CENTURY WIRE


This post was published at 21st Century Wire on JUNE 17, 2017.

THE TITANIC SAILS AT DAWN: WARNING SIGNS POINT TO DANGER AHEAD IN 2017

‘When did the future switch from being a promise to being a threat?’ – Chuck Palahniuk, Invisible Monsters
Despite our best efforts, we in the American police state seem to be stuck on repeat, reliving the same set of circumstances over and over and over again: egregious surveillance, strip searches, police shootings of unarmed citizens, government spying, censorship, retaliatory arrests, the criminalization of lawful activities, warmongering, indefinite detentions, SWAT team raids, asset forfeiture, etc.
Unfortunately, as a nation we’ve become so desensitized to the government’s acts of violence, so accustomed to reports of government corruption, and so anesthetized to the sights and sounds of Corporate America marching in lockstep with the police state that few seem to pay heed to the warning signs blaring out the message: Danger Ahead.
Remember, the Titanic received at least four warnings from other ships about the presence of icebergs in its path, with the last warning issued an hour before disaster struck. All four warnings were ignored.
Like the Titanic, we’re plowing full steam ahead into a future riddled with hidden and not-so-hidden dangers. We too have been given ample warnings, only to have them drowned out by a carefully choreographed cacophony of political noise, cultural distractions and entertainment news – what the Romans termed ‘bread and circuses’ – aimed at keeping the American people polarized, pacified and easily manipulated.
However, there is still danger ahead. The peril to our republic remains the same.

This post was published at The Daily Sheeple on JANUARY 5, 2017.

David Stockman: America Now Lives Under A ‘Perverted Regime’

The following video was published by ChrisMartensondotcom on Oct 2, 2016
David Stockman, former director of the OMB under President Reagan, former US Representative, and veteran financier is an insider’s insider. Few people understand the ways in which both Washington DC and Wall Street work and intersect better than he does.
In his upcoming book, Trumped! A Nation on the Brink of Ruin…And How to Bring it Back, Stockman lays out how we have devolved from a free market economy into a managed one that operates for the benefit of a privileged few. And when trouble arises, these few are bailed out at the expense of the public good.
Stockman brings us his report of what 30 years of politics, degenerative crony capitalism and ‘bubble finance’ have finally wrought. The upheaval and crossroads represented by Donald Trump’s candidacy spell economic disaster or resurgence, depending on the steps America chooses to take from here.

What Will Result From Sideways?

The economy of 2015 started out ‘unexpectedly’ weak before succumbing to ‘global turmoil.’ It was the events of last summer that began to sow serious doubts about not just the economic narrative seeking to dismiss weakness (‘transitory’) but rather central banking and QE itself. The repeat in January/February further eroded mainstream credibility, particularly since only a few weeks before the Federal Reserve in particular pronounced full health. It was an embarrassing but poignant ‘dollar’ rebuke.
In the middle of 2015 just prior to the outbreak of the ‘dollar’ ‘run’, it was perhaps somewhat understandable for the layperson or the general public to wonder what was going on. Any disruption in terms of the domestic economy did seem as Janet Yellen was claiming. For all the grief even by late July last year, everything seemed to be limited to overseas events; a fact which economists and policymakers played up whenever they could. They should have known better.
I wrote at the end of last July that what was going on overseas was yet another warning even though it may not have seemed like it had anything to do with the United States:
Sticking with purely financial expression of the eurodollar standard it is easy at times to forget such monetary influence has very real consequences. That is true in the US in particular, as even though the recovery is both deficient and waning it isn’t the disaster it is in other, connected places. It was, after all, the rise of the eurodollar standard as a wholesale system starting in the middle 1990′s that more tightly stitched the global economy, an open system architecture that eludes, still, the grasp of monetary policymakers. As such, they have a great tendency to miss and misapprehend what is really happening and because of that they will simply make it all worse without much hope for an upside.

This post was published at David Stockmans Contra Corner on September 20, 2016.

Below The August Jobs Headline – -Even More Weakness

In the technical notes for the Employment Situation Report, the payroll numbers that everyone obsesses over in fine detail, the BLS still shows a 90% confidence interval at 1.6 standard deviations that works out to /- 115k. That means that whatever number gets splashed onto every headline and worked into every major commentary piece isn’t really the number of payroll changes. It is a statistical estimate that only anchors that confidence interval.
What the BLS actually reported for August was that if they gathered all the data again and again100 times, it is expected that in ninety of those the payroll gain would fall in a range of 266k at the upper end of the confidence interval and 36k at the lower end. That changes the interpretation dramatically from the certainty that is reported about how there was a ‘disappointing’ 151k jobs created in August 2016. In fact, given that confidence interval, it could be that the true amount of job gains was something like 266k and consistent with the mainstream interpretation of the past two months that made everyone forget all the economic problems, or closer to 36k and the disaster that so unnerved everyone in the May report (and anything in between those extremes).
There is entirely too much focus and deference to the individual monthly figures; they tell us very little in the end. That is even more the case in the past two years where purported job gains, statistical or real, have proved completely irrelevant to the overall state of the economy. And that discrepancy has led even further into the wrong direction; rather than question the payroll numbers as statistics, the fact that the BLS figures have been in a world of their own has caused this emotional response where the media and economists now scrutinize the fine details of each monthly payroll estimate that much more. The mainstream has declared even more meaning out of desperation even as the usefulness of the jobs report actively declines (as if such accuracy was ever possible in the first place).

This post was published at David Stockmans Contra Corner on September 4, 2016.

The ‘Myth Of Morning In America’ – – How The Public Debt Went From $1 Trillion To $35 Trillion in Four Decades, Part 2

Morning in America – the Historical Inflection Point
……. And that was the historical inflection point. Thereafter, Social Security and Medicare entitlement reform was off the table due to the trick of the front-loaded payroll-tax increase.
This caused cash surpluses in the trust funds and the accumulation of intra-governmental accounting IOUs for the next two decades. At the same time, these front-end surpluses functioned to bury the long range fiscal disaster these intergenerational ‘social insurance’ entitlements embody in 75-year projections that are always way too optimistic.
Likewise, the White House took any further tax increases or defense cuts off the table in January 1985. The spending-cut-weary politicians of both parties, in turn, were more than happy to oblige by shelving any further meaningful domestic spending reforms, as well.
So in 1985, fiscal policy went on automatic pilot – where it has more or less languished ever since. Even well before the fiscal madness of George W. Bush broke out in 2001, the handwriting was on the wall.

This post was published at David Stockmans Contra Corner on September 2, 2016.

Comrade Capitalism – – How Washington Nationalized The Mortgage market

THE most dramatic moment of the global financial crisis of the late 2000s was the collapse of Lehman Brothers on September 15th 2008. The point at which the drama became inevitable, though – the crossroads on the way to Thebes – came two years earlier, in the summer of 2006. That August house prices in America, which had been rising almost without interruption for as long as anyone could remember, began to fall – a fall that went on for 31 months (see chart 1). In early 2007 mortgage defaults spiked and a mounting panic gripped Wall Street. The money markets dried up as banks became too scared to lend to each other. The lenders with the largest losses and smallest capital buffers began to topple. Thebes fell to the plague.
Ten years on, and America’s banks have been remade to withstand such disasters. When Jamie Dimon, the boss of JPMorgan Chase, talks of its ‘fortress’ balance-sheet, he has a point. The banking industry’s core capital is now $1.2 trillion, more than double its pre-crisis level. In order to grind out enough profits to satisfy their shareholders, banks have slashed costs and increased prices; their return on equity has edged back towards 10%. America’s lenders are still widely despised, but they are now in reasonable shape: highly capitalised, fairly profitable, in private hands and subject to market discipline.
The trouble is that, in America, the banks are only part of the picture. There is a huge, parallel structure that exists outside the banks and which creates almost as much credit as they do: the mortgage system. In stark contrast to the banks it is very badly capitalised (see chart 2). It is also barely profitable, largely nationalised and subject to administrative control.

This post was published at David Stockmans Contra Corner on August 25, 2016.

11 COMMON SYMPTOMS OF THE GLOBAL DEPOPULATION SLOW KILL

‘Maintain humanity under 500,000,000 in perpetual balance with nature.’ – The Georgia Guidestones
The full-spectrum global attack on human health is quite obvious to see for anyone who is paying attention and in search of wellness. So many of the factors that are negatively influencing public heath could easily be prevented or removed from society, yet the decisions of the ruling class continue to ensure that our food supply is toxic, that our environment is compromised, and that our exposure to chemicals and industrial waste is total. Why?
With the stroke of a pen carcinogenic poisons like Monsanto’s Roundup could be banned. Industrial disasters like Fukushima or the Deepwater Horizon could easily get the attention they deserve from world powers, but the will to intervene on behalf of human and environmental health is zero, while the will to intervene militarily in corporate and political affairs is guaranteed.
People are suffering more than ever from a host of chronic conditions and illnesses that can wreck even the healthiest and strongest of us. To be sick is the new normal, and to be healthy is outstanding and unusual.
Concerned citizens are battling grass roots struggles on all fronts, yet, at the top levels of society the corruption, gross negligence, and seeming incompetence continue unabated, ensuring that important decisions always favor the health of corporations and special interests.
With such obvious disregard for life, it would be naive to presume that our national and global leadership have our best interests at heart, and also to assume that any of this could be accidental. And when we look at comments and statements from some of the world’s most influential people, a dark philosophy is uncovered, and a shocking agenda todepopulate planet earth is revealed. See for yourself:

This post was published at The Daily Sheeple on AUGUST 22, 2016.

One ‘Conspiracy Theory’ Trump Needs to Push

Playing a coveted role in the most one-sided assault in the history of political journalism, NBC News ran an article last week that managed – in the headline – to insult both the candidate and his base, ‘Trump’s Conspiracy Theories Aren’t Far Outside GOP Mainstream’.
Today, if a politically troublesome issue arises, the media feel no pressure to investigate. Confident their peers will slack off as well, they tend to dismiss the issue as a ‘conspiracy theory’ and deride those who raise it as gullible, paranoid, and probably racist.
Donald Trump has raised any number of such issues, and the media have reflexively attacked him for raising them. His focus has been on Barack Obama’s quasi-fictional past. A more profitable focus, however, would be on Hillary Clinton’s future fitness to be president. I refer specifically here to her role in the corruption of the TWA 800 investigation.
When my book, TWA 800: The Crash, the Cover-Up, The Conspiracy, was published last month, I hoped the twentieth anniversary of the disaster might prompt at least some media interest. I was kidding myself. The collective urge to stop Trump and elect Hillary has silenced the major media. Trump will have to ask his own questions.

This post was published at Lew Rockwell on American Thinker / August 17, 2016.

A Clinton Presidency Will Be A Disaster For The Caribbean

Based on the destructive policies of Bill and Hillary Clinton towards Haiti and Honduras, both in and out of political office, a Hillary Clinton presidency would be a disaster for the Caribbean Basin. The Clintons’ use of poverty- and earthquake disaster-ridden Haiti as a personal cash cow stands as one of the most egregious examples in recent history of American politicians using the misery of others to line their own pockets. After helping Haitian President Jean-Bertrand Aristide regain power after a 1991 military coup, sanctioned by the Central Intelligence Agency, ousted him, the Clintons have done everything possible to ensure that Aristide and his progressive populist political party have not been returned to power.
The reason why the Clintons have suppressed the will of the Haitian people is chiefly based on Arkansas crony capitalism. The US Agency for International Development (USAID), the infamous cipher for CIA covert activities, and members of the Arkansas Rice Growers Association (ARGA), who are political cronies of the Clintons, have wreaked havoc on Haiti’s once thriving rice growing business. Once a net exporter of highly-nutritional rice, a combination of USAID policies and one-sided Clinton-era trade deals destroyed the Haitian rice industry and made the country dependent on expensive and non-nutritional genetically-engineered bleached white rice from Arkansas agri-businesses. These agri-businesses have contributed generously to the political campaign coffers of both Bill and Hillary Clinton. In 2008, the soaring price of rice worldwide and price-fixing by US agri-businesses linked to the Clintons resulted in food riots breaking out in Haiti.

This post was published at Zero Hedge on Aug 16, 2016.

USA Watchdog Interview

Greg Hunter does a nice job, and asked me to appear — here it is, embedded at the bottom.
The take-away from this, if you don’t feel like watching the interview, is quite simple: Without the Rule of Law we have nothing, and our nation currently faces a critical fiscal emergency at the federal level just a few years down the road — certainly, during the next President’s term.
There is no way out of that box without taking on the medical monopolies. None.
That’s the math.
2009 / Obamacare was an attempt to “buy more time” along with protecting said monopolies from a market-driven incipient collapse. This was rank public corruption on a grand scale, and it did nothing more than add a small amount of time, much like closing “watertight” doors on the Titanic when the water can cascade over bulkheads (as I expected it would and wrote on at the time) because all it could do is force more people onto a sinking ship. The compound growth nature of federal spending on medical care has remained unaltered; it was not flattened to zero, or even to the expansion of nominal GDP. Worse, the expansion rate for Medicaid, several years after its one-time expansion under Obamacare (in other words the one-time effects are gone), exceeds that of Medicare — so those who claim the cost escalation is due to people getting older are lying through their teeth.
The bigger-picture issue, and the one that threatens to turn this entirely-predicted fiscal catastrophe (one that I’ve talked about for 25 years and written about pretty-much continually for the last 8 right here in The Ticker) into an economic and social disaster never before seen in America (but seen repeatedly in other nations such as Venezuela and Argentina!) is that innovation has effectively collapsed at the same time.
Why?

This post was published at Market-Ticker on 2016-07-31.

Crude Crunch Time – – -Glut Without An End In Sight

The oil industry is still ‘a disaster,’ with an oversupply issue that doesn’t appear to be balancing out anytime soon, John Kidluff, partner at Again Capital, said Tuesday.
Kilduff, who has been bearish on crude, pointed out that refiners are soon going to go into their seasonal maintenance. ‘The little bit of oil that got taken out of storage for the past 12 weeks or so, in terms of inventory reports, is going to come right back on,’ he said in an interview with CNBC’s ‘Power Lunch.’
Plus, Libyan oil will be coming back online and Chinese demand is expected to fall off, Kidluff said.
‘This is a glut without end in sight.’
U. S. crude settled down 21 cents Tuesday to $42.92 a barrel. Brent was up 1 cent to $44.73 per barrel in late trading.

This post was published at David Stockmans Contra Corner By Michelle Fox, CNBC ‘ July 27, 2016.

What Oil Price Recovery – – -It’s August Again, Stupid!

On February 6, 2008, oil prices (WTI) dropped to $87.16, the lowest price since the prior October. Oil had been rising as the market misunderstood and dramatically mispriced what was going on; buying on the idea of monetary policy accommodation in growing intensity, while at the same time not factoring the hidden monetary destruction that was far greater. It was in many ways an extension of then-Fed Chair Ben Bernanke’s March 2007 Congressional testimony that, ‘problems in the subprime market seems likely to be contained.’ Whatever was happening in global finance, the illiquidity was expected both to stick to MBS and mortgages exclusively while being overcome by the ‘Greenspan put’ of greater monetary effort under Bernanke.
From early February on, despite all the unfolding disaster leading up to Bear Stearns that March, oil prices were financially insulated by those misconceptions. There was only a brief pause in the surge just after Bear, as WTI fell from about $110 to $100 only to take off again once it appeared (as was repeatedly claimed and emphasized) that monetary policy was working. It wouldn’t screech to a halt until oil hit $145 per barrel the day before the July 4th holiday.
There was some volatility in the days following, but on July 14, 2008, WTI was right back at $145. In between, Indymac had failed and, more troubling, the giant GSE’s had come under severe funding strain, with their stock prices tanking dramatically. As a result, the SEC announced on July 15 that it would effective July 22 ban naked short selling of not just the GSE’s but also primary dealer banks. It was, effectively, an announcement that dollar funding was really much more than Fed talk, and that all the optimism about the dollar in response to monetary policy was dangerously misplaced.

This post was published at David Stockmans Contra Corner by Jeffrey P. Snider ‘ July 27, 2016.

Brexit: A Reaction Against the Globalist Parasites and Scavengers

New Junkie Post
Gilbert Mercier
From the west to the east, and the south to the north of our global horizon, it is the same tableau: the horrendous killing fields of disaster capitalism where its cohorts of 18-wheelers, heavy road machinery and police patrol cars roam the landscape continuously and are turning us and the better principles of our humanity into countless road kills.
Hell on Earth is to be our common fate, and we might have already reached a point of no return. The corporate hyenas and political vultures that generally constitute the global elite are joyfully feeding on the carcasses of justice and morality; rationality and empathy; common sense and the notion of public good; sound governance without corruption and equality before the law; and last but not least, freedom and fair governance through democracy.

This post was published at 21st Century Wire on July 1, 2016.

Brexit: A Glorious Victory

As the results of the British referendum on remaining in the European Union rolled in, and the victory of ‘Brexit’ became apparent, UK Independence Party leader Nigel Farage summarized its meaning:
‘Dare to dream that the dawn is breaking on an independent United Kingdom!
‘This, if the predictions now are right, this will be a victory for real people, a victory for ordinary people, a victory for decent people.
‘We have fought against the multinationals, we have fought against the big merchant banks, we have fought against big politics, we have fought against lies, corruption and deceit.
‘And today honesty, decency and belief in nation, I think now is going to win.
‘And we will have done it without having to fight, without a single bullet …’
As ordinary British people celebrated, the London elite – and their international comrades – reacted with fury. The ignorant masses – whom, they rather stupidly claimed, were Googling ‘What is the EU’ after voting to rid themselves of it – were ‘racist,’ ‘reactionary,’ and – of course – ‘isolationist’ Know-Nothings who had thrown away a glorious future for an ‘uncertain’ although supposedly much ‘darker’ withdrawal into ‘Little England.’
There has been much discussion in these circles about who’s to ‘blame’ for the Brexit vote – the assumption being, naturally, that it’s a Bad Thing, a disaster for which someone must take responsibility. The best of these head-scratchers comes courtesy of Glenn Greenwald, who writes:

This post was published at David Stockmans Contra Corner by Justin Raimondo ‘ June 27, 2016.

The Long Road To Failure – – How Keynesians Conquered The Central Bank And Then Struck Out

It is human nature to extrapolate in straight lines, to take what is as what should forever be. In economic statistics, tail risks continue to live outside the tails because the math can never get past that limitation. No matter how sophisticated the ‘jump diffusion’ tendencies, no one can predict inflections. This is not to say there aren’t warnings, usually there are. But institutional inertia particularly with regard to apparent prosperity is a powerful force of destructive capacity.
In 1927, John Maynard Keynes confidently declared, ‘there will be no more crashes in our time’ such was his faith in centralized man. Despite the error revealed in disastrously in just three years’ time, in August 1971 President Richard Nixon famously appropriated Milton Friedman’s earlier declaration that ‘we are all Keynesians now.’ Friedman’s quote was, he later claimed, taken out of context by a December 1965 Time Magazine article with John Maynard Keynes’ face glaring on the cover. In 1968, Friedman said of his attributed affability towards the economist, ‘We all use the Keynesian language and apparatus; none of us any longer accepts the initial Keynesian conclusions.’
Nixon’s use of the quote was still far too similar even to where Freidman was protesting; interventionist policies would be the only way forward. Friedman agreed, only split into the monetary realm where so many others at that time were working it through fiscal policies.
Just nine years after Nixon declared everybody one, the Joint Economic Committee of the United States Congress confirmed nobody was left to be – on the fiscal side. The disaster of the Great Inflation was palpable enough that even partisanship was no longer an impediment to the necessary judgement. Published on February 28, 1980, the JEC report thundered in its introduction:

This post was published at David Stockmans Contra Corner on June 21, 2016.

A Palace For Fannie (Mae) – – Why The Imperial City Must Be Sacked

To hear the establishment media tell it, you would think that Attila the Hun was fixing to sack the Imperial City. Would that Donald Trump were that bold or dangerous.
Then again, he is a showman of no mean talents. So if there is a maquette of Fannie Mae’s planned new $770 million headquarters somewhere around Washington DC, he could start the sacking right there. Hopefully, he would not hesitate to shatter it with a fusillade of tweets – -or even take a jackhammer to it while wearing a Trump hard hat.
Fannie Mae is surely a monument to crony capitalist corruption, and living proof that massive state intervention in credit markets is a recipe for disaster. But rather than shut it down after it helped bring the nation’s financial system to the edge of ruin, the beltway pols have come up with an altogether different idea.
To wit, they plan to move Fannie from her already luxurious NW Washington headquarters to this hideous new glass palace to be built in the heart of Washington DC. Could there be a bigger insult to the 15 million families who lost their homes to foreclosure owing to the crash of the giant housing bubble that Fannie Mae and the crony capitalist crooks who ran it helped perpetuate?

This post was published at David Stockmans Contra Corner on June 18, 2016.

The Keynesian Conceit: If It Works In Theory, It Must In Practice

Walter W. Heller was said to have been an ‘educator of Presidents.’ As an economist and Presidential advisor in the inner circles of DC, Heller worked with more candidates and officeholders than perhaps any other man. As he himself described, his influence went all the way back to Adlai Stevenson and kept on through Kennedy, Johnson, Carter, and Mondale. To his mind, he takes credit for turning Presidents into thorough Keynesians starting with JFK in January 1963 and the tax cut ‘stimulus’ that Heller claims was ‘born on my desk.’
As an economist and advisor, Heller seems to have spent a lot of time about the 1960′s and almost none describing the 1970′s. Perhaps his greatest contribution to that decade was a quote attributed to him describing economics. ‘An economist is a man who, when he finds something works in practice, wonders if it works in theory.’
Among the most pernicious of these theories to have been backward applied in exactly that manner is ‘rational’ expectations theory. This was developed in the 1980′s to try to explain the disaster of the 1970′s in terms that would save econometrics. Thus, it is applied in great detail and mathematics to ‘inflation’ and is often discussed only in that context. Among the most influential to have used rational expectations theory was John Taylor as the basis for the Taylor ‘rule.’
In a 2007 speech, then-Federal Reserve Chairman Ben Bernanke described the updated expectations framework as it at that time related to inflation and gradualism in monetary policy (into the onrushing storm).

This post was published at David Stockmans Contra Corner on June 15, 2016.